Through the magic of twitter, I recently came across a different type of commercial real estate blog, Model For Success by REFM. The REFM blog covers all of real estate financial modeling including Excel tips and tricks, financial modeling education, market insights and career advice. As a CPA and finance major, I find the insights particularly interesting.
After reading a very informative post on CRE outsider about the future of CRE data, I began to think about an often-debated question among my friends (we are geeks, what can I say). This question revolves around if Houston commercial office space (or anywhere for that matter) is just another commodity (like wheat, coffee, airline tickets, etc.) or if this definition oversimplifies the Houston commercial real estate business. A commodity is defined by Webster’s as “a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors other than price “.
In order of importance….Happy Mother’s Day to all the moms out there!
Tenant Improvement Allowance or credit, is the negotiated sum a landlord is willing to spend to customize the space needs of a particular tenant. Typically found in the Leasehold Improvements or concessions section of a commercial lease, this type of negotiation is often stated in dollars per square feet and is present in standard office leases for commercial real estate in Houston.
The concept of sharing office space, either through Houston Coworking or co-spacing is gaining traction almost daily. Fast Company just published an article touting the benefits of working in these environments. Examples abound in both San Francisco and New York Coworking and this decade old idea is quickly maturing into more advanced concepts. It is amazing this idea is already evolving before the first iteration has made it to Houston!
I grabbed coffee earlier with Joe Stampone of A Student of the Real Estate Game. He knows his stuff and the blog that he has been writing for more than two years is a first rate resource to learn more about Real Estate as an industry. While it won’t help you find that perfect space TheSquareFoot, it is one of the best destinations for actual industry knowledge around. Also, for those of you looking to get into real estate as a profession, he has plenty of invaluable advice.
The term Base Year pertains to tenant property expenses in commercial buildings for lease. Having a base year lease agreement is essentially the combination of a Triple Net Lease, where the tenants are responsible for the property's real estate taxes, insurance, maintenance, repairs, utilities and other items and a Gross Lease, where the property landlord handles those expenses. A landlord likes base year agreements because they act as a safety net, should the property's expenses significantly increase over the course of a given tenant's lease term. In general, a base year is calculated on a calendar year basis or the first 12 months of a tenant's occupancy.
Many solo practitioners and entrepreneurs in Houston begin to think about their space options once business starts to take off and they realize that working from home might not be the best option. I decided to do some research on the best way to find Woodlands executive suites on the web and the findings surprised me.
The recession’s hit to Houston retail space has been well documented. In this recent article in the Wall Street Journal, several stats from a survey by Colliers International covering the closures of four prominent big-box retailers over the last couple of years are particularly sobering. Just over half of the surveyed properties are still vacant and the rest of them were re-leased for rents that averages almost 20% less than what the previous tenants were paying. As the article points out, the recent bankruptcies of Blockbuster and Borders will only add to the problems. One positive note is that none of the seven borders locations in Houston were on the initial chopping block so it appears that Houston retail space is holding up better than other national markets.
In light of the gargantuan announcement of CoStar’s acquisition of LoopNet for some $800 million, I thought it would be fitting to take a close look at why the two heaviest hitters in the online commercial real estate world became one.
It seems like every other day I see an ad for an executive suite or virtual office in Houston. I thought I would do a little research as to the differences between them and I learned how they are ultimately becoming the same thing. In the past five years, the virtual office has become one of the favorite words of executive suite landlords in Houston.
This morning I came across this fantastic article about commercial lease clauses Open Letter to Tenants : 19 Lease Secrets Straight From A Broker. from Duke Long, a very knowledgeable commercial real estate blogger, and it really hit home with one of the biggest red flags in commercial leasing: the electrical clause in every lease agreement of a Houston office rental.
I was just in New York City for a friend's wedding and used the opportunity to meet with and talk to other early stage companies about their experience with finding office space. New York commercial real estate is clearly a whole different beast, but the general concerns are the same. They were looking for open, collaborative spaces at a decent price, however, they did not want to lock themselves into a space too big or small as things can change very radically and quickly. These companies were funded, had multiple employees, and had a dedicated server / computer equipment (I guess sometimes, a laptop isn’t enough). Thus [co-working in NYC] (http://www.thesquarefoot.com/New-York-City/Coworking-in-New-York] was not an ideal option. They wanted some form of dedicated space.
As a commercial real estate professional, I am always looking for the best resources to help me market Houston commercial real estate. I have worked in several cities around the country and one of the better resources is REDnews (which stands for Real Estate Directory News). Plus, they specialize in my favorite state...Texas.
Being a successful entrepreneur is a desire of many hard working individuals. Though being an entrepreneur is a great way to take control of your work and life, it poses a few challenges when it comes to balancing the difference between work and home life, especially for those working out of their homes. It got me thinking, what office space options for entrepreneurs are out there for those who do not have a lot of cash, but also don't want to be holed up in their house all day everyday?
The internet's newest Houston commercial property website is holding a logo design contest on 99designs.com for it's new logo. We have 8 fantastic finalists and we need your input to make sure TheSquareFoot has the best looking logo on the internet.
After reading the post on the principles in choosing office space, I started thinking about how relevant each of these principles were to me with regards to choosing Houston commercial property for lease. I would rank these principles in the following order -
For start-up companies or existing businesses that are in need of cost cutting, subleasing Housotn office space may make more sense than signing a standard office lease with the landlord of a commercial property in Houston.
Very often these days, LEED is perceived to reflect beauty, efficiency, forward thinking, and modernization. While these things are certainly associated with LEED construction and design, there are some noteworthy disadvantages that should be taken into account prior to building, buying, or leasing LEED offices in Houston.
Leadership in Energy & Environmental Design or LEED is essentially a building certification system developed by the U.S. Green Building Council. It's primary purpose is to give office space building owners and operators guidelines for achieving efficient energy savings, utility efficiency, CO2 emissions management, and overall improved environmental quality.
The guys entered a business plan competition at Columbia University and were required to make an elevator pitch explaining how their product helps potential tenants find office space in Houston. Here it is!
Landscaping commercial real estate plays a very important role in a commercial property's appearance, especially to potential customers and business clients coming in and out of a Houston office space rental or Houston retail space. It's an integral part of the leasing process, so most commercial property owners will spend a considerable amount of time and resources ensuring the building's landscape design is maintained. Building visitors who could potentially be shopping properties in preparation of signing an office lease are certainly aware of how well the grounds are kept.
Commercial property landscaping isn't just about picking the prettiest trees, flowers, and bushes, and having a contractor plant them and call it a day. There are several factors that need to be considered before a landlord decides what kind of landscaping his/her property needs. Depending on the landscaping budget and climate, an office rental property or retail shopping center may be better suited to have plants that can with stand climate changes but may not be as visually appealing. A higher budget may mean more variety and aesthetic beauty, which usually comes with more frequent maintenance.
Well laid out offices in Houston are integral in overall office productivity and good feeling amongst employees and office visitors. It's not just about cramming as much furniture and as many people into a room as possible, but rather organizing everything so that the overall flow of the office layout aides in efficiency and doesn't cause a single stop-gap in the day today operating practices. Below are a few basic pointers to consider when organizing a new Houston office space or transforming an existing area:
Houston industrial leasing can be a little trickier than typical Houston office leasing or Houston retail space, because it's not just about size, rental rate, and location. Many other factors go into deciding the best industrial / warehouse space to rent, and it's important for industrial businesses to understand them long before they sign a lease.
Executive Suites are sets of individual offices typically sublet from a larger suite of office space. The lessee of the designated larger suite of offices is considered the proprietor and he/she rents entire floors and leases the smaller office spaces or workstations to businesses that don't need, or can't afford, standard office spaces. In many cases, a set of executive suites will have common areas, such as conference room or kitchenettes, that each executive suite lessee can utilize at their discretion or on a reserve schedule.
Businesses seeking to lease Houston retail space will often have to consider several factors before determining the best type of retail space for lease to fit their needs. Some retail businesses rely on "impulse purchases" while others rely on carefully planned purchases. Impulse retail will focus heavily on location and visibility, and will usually require a premium location within a shopping center, meaning higher rents. Businesses that aren't reliant on impulse purchases don't typically need to be in an incredible location with optimal visibility, although that's always important for any type of business. Access and visibility are much less important for "destination" retail, but again, will always help. Here are the different types of retail space for lease, with descriptions:
Typically, when dealing with commercial leases for space a gross, single net, double net, triple net, or percentage lease is used.
- Location - Your office space or retail space location is a major consideration, for a variety of business and personal reasons. If your clientele comes to you, how far are they willing to drive? Are you accessible? Will the locale be agreeable to your employees? How far is your commute? You’ll want to consider which restaurants and services are nearby, how noisy the area is, what the view is like, and who your neighbors are.