1. Does the building portray the message you’re trying to deliver?
We have heard from many clients over the years they are not seeking anything “too lavish”, wisely choosing to be cautious about sending a signal that the luxury office setting is where all their clients’ money goes. Gone are the days, or should I say dwindling, are the days of all marble, chic, and high end finishes being selected for law firms and the like. On the other hand, opting for a property with faded striping in the parking areas, an old elevator and missing lightbulbs may send out a struggling business vibe. Find a property and suite that projects a relatable message to your targeted client base.
2. Can the building handle your business should you grow?
A sign of a successful, strong business is growth. Signing a 5 year deal on a space and bursting at the seams with time left on the lease is never a comfortable scenario. A building with ample suites in all size ranges or that offers adjacent suites is the best option if you foresee growth in your future. Your tenant rep should negotiate a first right of refusal for all or a portion of any adjacent suites on the floor you plan on occupying that become available during your tenancy. Landlords will gladly offer you a larger suite within their building should you need to expand. Look at it from their point of view, a quality tenant that wants to take down more space? Yes please!
3. I know you know – Location Location Location
This is a Biggie! Obviously, you have an area in mind for your office. Two primary factors we hear frequently are ease of access and drive time for your employees and clients. As employment rates decline the stakes are raised to attract quality employees. Having a building clear on one side of town vs. a more central location, could mean not only limiting your hiring pool but your client base as well. A location offering nearby amenities is also important to consider, having healthy options to grab lunch and get the heck out of the office can make everyone a lot happier. Safety should play a role as well. We recently represented a nonprofit that had only female staff. Buildings without a security guard present were automatically eliminated in some submarkets because safety is an utmost concern.
4. Does the layout work for you or are you making it work?
I can’t tell you how many tenants we have toured and each space we walked into was “perfect”, but as we measured and discussed which department would go where, which exec would want which office, we would quickly deduce that the space in its current configuration did not make the cut. Providing you have enough time, tenant improvements can be completed and the space can be configured to meet your needs. If time is a factor, and you’re limited to strictly second generation spaces. DO NOT “Make the Space Work.” If you need a breakroom, hold out for a space that provides one. Trust me after 8 months of cleaning out your coffee cup in a common area restroom you will want to scream. This is your business, you will spend hours and hours within the selected suite, really make sure you feel comfortable. As you walk the suites presented to you, imagine the flow of your business and make sure they are aligned. Remember when everyone is happy and comfortable - productivity, creativeness and moral all rise.
5. Do you have proper representation?
Ideally you have engaged a tenant rep within your market. (If you have not, call our team. We have a global reach and would be happy to match you with the perfect team in your market.) Confirm that your tenant rep specializes in commercial, and most importantly has the knowledge, experience and resources to get you the best deal terms possible. Does your lease include often looked over items like renewal rights, covered/reserved parking, and reasonable holdover language? If the above terms look foreign, it may be time to engage a professional. Your tenant rep should always recommend you have a real estate attorney review your lease draft before you sign. We are known to wear many hats, and are well versed on the lease language, but we are not attorneys. Leave room in your budget, often that small hit up front can save you thousands of dollars and heart ache down the line.
This is just to get you started. Office space is our teams main and only lane, and our passion. Everyone is good at something, our team excels in surveys, tours, proposals and negotiations of office leasing. Vacancy rates and new developments are what we dream about, and happy, returning, referring clients are what we strive for. Your interests are our interests.
Team Palmeri – Wainwright are exclusive tenant representatives within the Las Vegas market, by not representing any landlords in town are able to offer 100% fiduciary to their clients. Can your rep claim that?
Blog written by Natalie Wainwright - Tenant Representation Cushman & Wakefield Commerce
You've made a great business decision and decided to engage Exclusive Tenant Representation to help you in your company’s real estate needs. Are you familiar with what to look for and what you can expect from your broker? The following are keys items to be aware of when selecting a broker and their team should they have one.
Strong market knowledge
In addition to providing you with quarterly reports on the overall market, your broker should have their finger on the pulse of the local office market. A sophisticated, experienced broker will have the ability to successfully leverage their relationship with landlord brokers to know all current listings, rates of both market and off market properties. A broker should have a deep, intricate understanding of their entire market, enabling them to offer you the most thorough survey and negotiate the best possible deal. A broker with a long, successful standing within the brokerage community will also be aware of any spaces coming to the market due to expirations, which may be ideal for your business. Landlords favor a deal presented by a knowledgeable broker with whom they know will negotiate based off strong market knowledge and has the capabilities to bring the deal over the finish line. Keeping current on build-out costs, employment rates and working closely with economic development groups are all things you should expect your broker to be involved in.
Strong Communication Skills
One of the most common things our team hears from our tenants is how disappointed they were with their previous representative’s response time and what they felt was a lack of care and or a sense of urgency. Your broker will handle numerous activities from detailed surveys, booking of tours, negotiations on proposals for all identified properties, lease review and countless other important detail oriented tasks. Establishing your expectations from the very start is a key way to ensure you meet deadlines, stay in front of the landlord’s broker, and don’t lose an opportunity. As the Las Vegas market continues to tighten, the adage “time kills deals” has never been so true. Your broker sitting on a counter proposal from the landlord’s broker, not responding to any follow up requests, or having a slow response time in general could give any competing tenants the advantage needed with the landlord, ultimately ending with you losing the space.
The Proper Bandwidth
As we touched on above, your broker will have their hands in numerous buckets in the interest of your company’s real estate needs. A lot of brokers take the “lone wolf” approach, which can offer benefits, however, when dealing with more than one client it is often unrealistic to assume that a single broker can effectively navigate the entire deal from start to finish as efficiently and timely as a team can deliver. Another option is a broker that leads a team, allowing them to not only keep the deal process flowing but even stay ahead of any and all processes. A team with more than one Exclusive Tenant Representative and additional staff is the ideal structure when overseeing large national clients and local clients. Combine a four-person team with the backing of a Global Commercial Real Estate Firm and that can be the ultimate recipe for at or below market deals, preferable deal terms and the vast amount of resources needed. There is no “I will get to it later”, “I didn’t have the time” or any other completely reasonable excuse for a single operator you may hear when engaging a sole broker. Delays and an inability to perform the needed steps can be detrimental to your business’s launch within the Market.
Exclusive means Exclusive
It is important to confirm your broker is indeed exclusively representing tenants within the market. The Broker will not have ANY listings, other than those that are being subleased by their tenants, meaning there are no loyalties that must be honored or incentives for negotiating on any particular buildings. The end game for your broker should they be exclusive is to get you the best possible rate and deal terms your business requires. Each tenant’s requirement is unique and having representation with only your interests in mind is the key piece to the puzzle. This would also be a good time to touch on specialties. Your broker should not specialize in any other facets of real estate other than commercial real estate. Would you contract a handy man for a home remodel or a company that specializes in home remodels? We would all choose the contracting company, which comes with the promise of knowledge, deep resources and the protection needed when signing anything that involves a contract.
Remaining cognizant of the above when engaging help with your real estate needs can be the difference between simply finding a space that will do, and creating an environment you, your company and your employees can feel comfortable in, and the flow of work can be at optimal levels. Keep this in mind and you’re sure to find the perfect broker for your company, should you require further information or are in a different market feel free to call our team and we can connect you with the market leader in your city.
Team Palmeri – Wainwright specialize in exclusively representing office users within the Las Vegas Market. Blog written by Natalie Wainwright.
With the second half of 2016 underway, Las Vegas is on the verge of becoming the next great American City. As so many of you that live in Las Vegas know, outsiders can’t comprehend how somebody can “live in Las Vegas”. Whether they’re 22 or 72, the majority of them know Las Vegas as Sin City and their two to three day stint on the strip. We ask our out of state clients if they’ve ever been off the strip, 95% never have. There is a stigma about Las Vegas that has eliminated Southern Nevada as an option for many corporate relocations, without exploring the true community we locals call home.
We feel this is all about to change. We are on the doorsteps of what is going to be a new Las Vegas for years to come. Why all of the sudden? Well it’s been a work in progress for years and is now just starting to shed light on those efforts.
Back when the Great Recession occurred, our state made an effort to identify other industries to draw to Nevada to diversify our economy and not be solely reliant on gaming and construction. Those efforts continue today, creating a drastically different landscape in the business community of Southern Nevada.
We are in the forefront of the advancement of transportation (Tesla, Faraday, UAV Testing, Hyperloop 1, Autonomous Vehicles, etc.). We are advancing in medical studies with a UNLV Medical School, Cleveland Clinic Lou Ruvo Center for Brain Health, and Roseman University leading the charge. Technology companies like Switch, Zappos.com and Banjo calling Las Vegas home. Logistics and Operations with millions of square feet of new distribution space being developed and leased by major corporations.
With all of the new companies and successes to Southern Nevada, none are more important than the NHL and potentially the NFL. What makes a professional sports team different? It’s what it is going to do for us as a community. Las Vegas is one of the most transient cities in North America, with roughly 80% of the population coming from somewhere else.
When we look back at what was the change that brought Las Vegas into the conversation of those companies looking to establish a significant presence here, it will be major sports. It will bring greater attention to a market that has always been known for gambling and conventions.
But most importantly it will give all residents of Las Vegas a true sense of home. A common bond we as locals have never experienced before. A team we can identify with to support, cheer, cry and grow with for generations to come.
During the great recession, of all the commercial real estate sectors, none were affected greater than the office market. For a company the two biggest cuts to the bottom line during the downturn were in space needs and staffing. The need to survive by going lean provided companies the opportunity to reassess their ability to provide services with less overhead than previously believed.
As the market has recovered, we have not experienced the same pre-recession organic growth within the traditional sectors of legal, finance and professional users. The majority of businesses continue to be very cautious as it pertains to taking on too much space for too long of a term without the appropriate flexibilities to adapt quickly to the ever-changing economy.
What has transpired is a new outlook on how the office space is utilized to build collaboration, efficiency and productivity. These new trends have spawned from the massive growth within the tech industry and the success in the open plan workplace. With senior employees and executives giving up their private offices work side-by-side with their colleagues, pressures are now being put on the traditional sectors to incorporate many of the same trends to attract the new millennial work-force.
Depending on the industry, there is a fine-line of how much you veer from the traditional layout. Law firms and financial companies still maintain the private office concept, however we are seeing a massive shift to same-size offices for the senior partners to the new hire, as well as full glass offices to incorporate natural light and collaboration and café style break rooms.
How does this affect your tenancy, particularly in Las Vegas? With Las Vegas historically 12-24 months behind the national trends in office space design, we are quickly catching up. The difference between Las Vegas and the major markets seeing these changes are:
· Minimal New Development – With the lack of new office development in Las Vegas (The Gramercy Phase II, only active office development), we are seeing tenants build-out the open plan workplace in buildings that were not designed for these layouts.
· Restrooms – With companies using less space, but not decreasing employees, existing buildings were built to a code based off a certain amount of private offices vs. open work space. This original design dictated how many restrooms were required in a building. With companies using 20-40% less space, this leaves the landlord the ability to lease additional space in the building, which equates to more people using the facilities. Landlords may have to start incorporating additional restrooms to accommodate these new open plan.
· Parking – Much like the restroom concern, parking is just as much, if not more of an issue and concern. With the market recovering, and landlords leasing up their buildings, what used to be an oversight when it comes to parking allocation, is being taken much more seriously. With the new open plan concepts, the existing inventory was not designed to accommodate the new parking ratios of 6-10 per 1,000 square feet of leased space. With traditional parking ratios of 3.5-5 per 1,000, landlords are either going to have to buy additional land, build a parking structure, leave space unoccupied in the building to accommodate the tenant’s high ratio, or focus on tenants that don’t require todays parking needs.
· Live-Work-Play – Unlike many of the traditional cities across the United States, Las Vegas is lacking Live-Work-Play options. With the majority of development happening in the suburban market, having an urban environment that provides a true live-work-play lifestyle in Las Vegas isn’t in the cards for the foreseeable future.
When exploring your office space needs, be sure to understand your needs today versus those same needs in 3-5 years from now, and how todays trends are going to affect your tenancy for the entire lease term. Having a complete and comprehensive strategy to align your facility needs with your business objectives will help overcome unforeseen obstacles down the road.
Shifting to a Landlord Market?
As the 2nd Quarter of 2016 has come to a close, we read all of the market reports, “with the slow pace of improvement and absorption” on the office front, “development isn’t needed due to the vacancy rates”, etc. the numbers minor improvements in the way of movement; however, the picture from ground level is much more interesting and one all tenant’s need to stay in front of. We know that your lease is typically not on your mind until the year of expiration, and you hate having to deal with the renewal/relocation questions and process. This will prove to be a very volatile 12-36 month swing in rental rates in the Las Vegas market shifting from what is still a tenant market, quickly to a landlord market, depending on location, of course. Are you aware of the changing dynamics and whether now is the time to start understanding the market so you can best determine how to align your real estate with your businesses strategy?
With vacancy rates ranging from 16.7% to 19.2% (depending on who’s report you read) or about 7.3 million square feet of vacant space, how can this be shifting to a landlord market? It’s the market dynamics. Since the recession, we have seen a steady increase in rental rates market-wide. This has come to a trickle over the last 6 months, with some Class A properties actually lowering prices. It’s when you get down to the details of the deals and the inventory to see what is truly going on.
During the recession we saw a huge “flight to quality” as C users moved into B, and B into A buildings, for cheaper than what they were previously paying. This took up a good portion of the space in the desired business parks, but it’s only over the last 24 months, as the Las Vegas economy recovers, that we have seen the majority of the remaining good space be absorbed. New businesses are opening, companies are relocating from other states, existing companies are expanding and hiring, and all of this is happening quickly. Now as clients are exploring the alternative options, we are not only seeing fewer potential spaces that fit the requirement of: geography, building class, cultural fit, size of space, desired layout, security, amenities, parking, etc… but the rental rates are higher, landlords are giving less in the way of free rent, tenant improvements and other concessions.
The supply of “quality” buildings is quickly dwindling in the suburban markets. This will not only raise the rental rates of the suburban inventory, but as the buildings fill up, this will force tenants back into the core of town, which will enable those landlords to also take advantage of the tight market.
The biggest concern from a tenant’s perspective should be the lack of any new office developments currently under construction. This stems from the developers also reading the market reports with high vacancy numbers. We now have seen other sectors (residential, industrial, retail) purchase premium land over the last 36 months, bringing prices for the good land locations to numbers that don’t make sense to develop office buildings based off the rental rates needed to achieve an appropriate return for the developer or landlord.
The best way to protect yourself from being a victim of the shift to a market is to stay well ahead of your expiration and align yourself with a market expert. We always recommend starting to analyze your space needs 24 months ahead of expiring.
CLIENTS REPRESENTED THIS QUARTER
Bank of Internet – 24,000sf (New Lease)
Bergman Walls Architects – 11,400sf (New Lease)
Rod Perdew – 6,000sf – (New Lease)
Dignity Health – 2,400sf – (New Lease)
Rob Jensen Co. – 2,100sf (Sublease)
Crawford & Company – 1,600sf (Relocation)
DaVita Medical Group – 3,700sf (Renewal)
Wright, Finlay & Zak – 9,800sf (Expansion)
Glumac – 1,600sf (Renewal)
Trident Construction – 18,600sf (Sale)
Your Lease is Expiring! Do you know your options? Do you have enough time to achieve your space needs? Do you know where to start?
Our team receives calls on a daily basis from Tenants in a panic. Their lease either expires in 1-6 months or they need space in 2-4 weeks. Leasing office space is a complex timely process with significant financial commitments to be considered by the Tenant.
The number one rule when it comes to leasing is to Start Early! Whether you plan on renewing, relocating or are looking for new space, it is important to allow enough time to evaluate your current situation, your projected future needs, assess the options in the marketplace and have the leverage you need to negotiate a favorable lease.
I want to renew my lease:
If you plan on renewing, the ability to execute a transaction in a shorter period is easily achievable. However, by doing so your current Landlord can make the assumption you do not plan on relocating. This gives the Landlord the leverage they need to keep you as a Tenant at less favorable terms than could have otherwise been achieved. Landlords know that Tenants will renew 70% of the time, as they understand the disruptions associated with an office relocation. In order to achieve the best renewal terms possible, you have to put your Landlord in a competitive environment, forcing them to get aggressive to retain your tenancy. Landlords understand the leasing process and the time needed to complete a transaction. By utilizing a Tenant Representation broker and implementing the proper timing to address a renewal, the Landlord realizes you are being informed about the current market conditions, the alternative options and they take your potential relocation much more seriously.
I want to relocate:
What do you need to consider when looking at a relocation? First you should establish an internal committee led by a senior employee and supported by the key decision-makers and department leaders (IT, Human Resources, office manager, etc.). Your Tenant Representation broker should have a single point of contact within this committee to keep the process simple.
The committee should work together to determine the following key components when considering new space.
When should I start?
Depending on the size of your organization and current market conditions, you should start the process of evaluating your office needs 18-24 months ahead of your current lease expiration. If you are a larger organization, we recommend 24-60 months of lead time.
By starting the process early, the burden of an upcoming lease expiration is eliminated, allowing employees to focus on business operations. The more time you have to negotiate results in better leasing terms whether it’s a renewal or relocation.
Where do I start?
By utilizing a Tenant Representation broker, the process becomes much more fluid and efficient. Our team handles lease negotiations on a daily basis, while a Tenant’s need to focus on their lease once every 3-10 years. Ensure your Tenant Representative is well qualified and has the technical skill, market knowledge and experience that your organization deserves. A Tenant Representative knows how to listen effectively to their client’s needs to ensure they are delivering and focusing on the important issues.
During this process, your Representative will familiarize you with the local office market conditions and review your existing lease commitments. By knowing the market vacancies, supply projections, current rental rates and tenant concessions, you will be in the position of leverage to best negotiate your next lease.
Cushman & Wakefield | Commerce can provide you with the Representation services needed to assist your company with your facility needs now and in the future.
Contact our team to discuss your specific office needs and the current opportunities in the Las Vegas market.