By Kanan Desai, Vice President – Office Services Group, SCGroup Real Estate
A major shift in work style has taken place. Technology has not only changed the way we work, but also the space we use. We no longer need a desk space that accommodates a large computer tower nor do we need lots of drawers for filing paper documents. Over the past several years large corporations have been looking at their workplace and the space they use through a magnifying glass to ensure that even the smallest criteria for improving their business has been addressed. Amongst all the factors, office rental costs and employee compensation are probably the two largest expenses for a company. With the economic uncertainty, it is imperative that companies look at alternate ways to keep their business growth successful and business costs low. Companies that pay attention in evaluating their organization’s real estate plan find it beneficial.
Over the past few years companies like Google and Apple, have spent time and money to implement alternative workplace strategies. These are large corporations with large real estate portfolios. The basic principal is to create an efficient space with less real estate, but with more flexibility and choice.
It is important to point out that the small and midsize companies can be equally successful with workplace alternatives. These companies may not have a large facility, but the end-users are ultimately humans striving for a productive environment.
Opportunities in the Middle Market
America is made up of hundreds of thousands of small to mid size companies. Business owners may find it difficult to justify the reason to look into understanding their workplace flow and patterns as an important factor that can lead to increased productivity and reduced real estate. But offices with even 10 to 50 employees can implement the process of workplace planning and realize the benefits. Through the following strategies, businesses can find a strong connection between real estate, a well designed workplace and company performance.
Over the years and through experience, here are a few a guidelines to consider when developing cost efficient and productive workplaces.
1. Establish- ‘The who we are and what we do’
This is your company brand, your mission. Organizing brainstorm sessions internally with your management staff or externally with workplace and design professionals, a vision for the future success of the company can be established.
2. Gain more by reducing desk size
There has been a historical decline in the amount of space assigned to an individual. This is relative to the digital age we live in and to account for less paper storage space. A typical workstation is now around 60 to 70 square feet per person. With reduction in desk space, there is now room to provide creative work zones giving employees a choice of location that can be innovative and agile.
3. Mobility
With today’s technology and smart workplaces, employees have an option to work as they move. Consider how many employees are mobile, how many can share workstations and if at all, do they need an assigned desk?
4. Open Office Vs Enclosed offices
This has been a hot discussion for many companies in establishing the positive effects. Some of the benefits include increased communication, flexible space, reduce square footage, increased daylight for productivity. While on the other hand the negative effects of noise, distraction and reduced privacy need to be managed. Though this has been seen as a culture change and employees seem to embrace the situation. A combination of both types helps achieve a good result.
5. Collaborative areas Vs Conferencing Rooms
Provide opportunities to collaborate more often. Instead of designing several enclosed conference rooms, provide more impromptu open collaboration areas. This can many times accommodate equal number of staff members but at the same time reduce square footage requirements. It has been found to increase employee engagement and creativity.
6. Technology
We are connected with work 24/7. Today employees are answering emails, conferencing and connecting with team members at anytime. Establish mobility of staff and the necessity to be connected with them and your clients. Adapt and manage changes in technology that are relevant to your business. Allow employees to be mobile but stay connected to keep the work process flow smoothly.
7. Human Factor
Design for employee retention. Provide spaces that promote a healthy environment and comfort. Provide a learning environment and mentoring opportunities. Face to face communication is important here. Help employees manage the cultural change and there will be less resistance.
8. Sustainability
Sustainable goals are plenty. But by simply using energy efficient solutions, harvesting daylight and strategies to reduce waste (real estate and material) can strongly impact your return on investment.
Many of these ideas can be established by merely reconfiguring your current office or by using furniture and its systems combined with technology.
Implementation Timing
These strategies can be implemented when a change is required. This change could be a:
As a business owner, create an office space that works for you. Don’t go overboard in trying to adapt everything that is out there. An office space should be designed with these alternate workplace strategies in mind not forgetting your economic goals. Consult a workplace strategist, a designer and/or a real estate professional to help and guide you through the process. Build on what you learn and learn from what you build.
By Byam Alexander, Vice President – Industrial Services Group, SCGroup Real Estate
When the importance of business location is discussed, it usually centers on factors such as proximity to prospective customers, suppliers, distributors, and access to and from major thoroughfares. In our current economic climate, economic incentives are an often overlooked opportunity for cost savings, leveraged funds, and revenue generating pools.
Benefits to Prospective Commercial Tenants
A business seeking to expand into a new facility, or purchase a facility should never underestimate the value of evaluating the prospective locations. During the vetting process decision makers should inquire whether or not any of properties under consideration are eligible for the plethora of capital improvement funds, tax credits, reimbursements, tax abatement, etc. available at various levels of government (i.e. local municipalities, states, and special districts). Access to these resources can facilitate transitioning into a new location or expansion within an existing site. The resources can also ease the financial burdens associated with expansions and relocations allowing businesses to recoup expenses or create new revenue centers (e.g. expansion of space for leasing to businesses offering complimentary services).
Benefits to Property Owners
Real estate developers and investors should also consider expanding its real estate portfolio by purchasing property within one or more various economic development incentive areas (e.g. tax increment financing district, enterprise zones, etc.). Prospective tenants may require accommodations for an expanded workforce, acquisition of new equipment and technology, or need an expanded or additional facility. Positioning the business within these areas can mean access to a variety of capital improvement funds, non-traditional financing options, opportunities to generate increased revenue, and tax savings and abatement initiatives. For an investor purchasing an industrial or commercial space relocating within an incentive area provides additional features that can be marketed to prospective tenants to help close leasing agreements and improve tenant retentions. Once located within these areas it’s almost like having a reservoir of resources to tap into for addressing future opportunities and needs of current and prospective tenants, as well as the property owner.
By Troy Golden, Vice President – Office Services Group, SCGroup Real Estate
One of the greatest values a tenant representation broker can provide to his client is advice during the lease negotiation with a landlord. A professional landlord negotiates leases every day, with the help of a leasing broker and an attorney. The tenant, who rarely participates in the market, should even the playing field by enlisting the services of his own advisers. Remember, hiring a tenant representative broker doesn’t cost you money, but it can save you money.
Below are best practice guidelines for commercial real estate lease negotiations. Please consider these tactics early in your space search process.
Develop Realistic Alternatives to Create a Competitive Environment/p>
Many tenants do not develop legitimate alternatives to their first choice. If a landlord believes you’re not willing to switch to a different property, you lose your negotiating leverage. Tenants often make this mistake in a lease renewal scenario; their landlord does not believe they are ready, willing, and able to walk away. The key to a successful negotiation is creating competition between your current landlord and other landlords in the area.
Start the Process Early
Landlords know that the managers of other buildings can take six to eight months to create a space plan, get construction pricing, agree on a rental rate, prepare a lease document and ready the space for occupancy. If a tenant waits too long before asking for a renewal proposal, he signals to the landlord that he’s not developing realistic alternatives, reducing his leverage in the negotiation. Landlords will drag out the process of a renewal in an attempt to limit the tenant’s alternatives and reduce the tenant’s negotiating leverage.
Knowledge is Power
A quality tenant representation broker can provide valuable knowledge to inform your position in a negotiation. Your broker should be able to answer the following questions:
Your tenant representation broker should also analyze the market to provide a true “apples to apples” comparison of different facility choices. Lease terms such as full service gross, modified gross, triple net, tenant improvement allowances, rental abatement, escalations, base years, operating expense stops and loss and load factors can obscure the true amount you’re paying and make legitimate comparisons difficult. A good tenant representative will sort through all this for you.
Contact Us – For any of your commercial real estate needs.
Steve Stoner
Managing Partner
SCGroup Real Estate
sstoner@scgroupre.com
630-656-1352
