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You can try…but why? How many leases have you signed recently? Do you know the market rent for commercial space in each individual neighborhood or building in Houston? How large of a tenant improvement build-out package should you ask for? How about some free rent? Is this landlord known as being easy to work with or will he find clauses to squeeze you on in 6 months because he is having financial trouble?
As Prime Property pointed out this past Friday (try saying that 5 times fast!), Texas was once again in the top 10 for corporate relocations. Texas has had a significant positive inflow of corporates for every year in the last decade. This is obviously great news for Texas real estate...and every type of it. For starters it's great for Texas office space landlords. These corporations move to Texas and need Texas office space of course, but then think about the next group of happy landlords. Corporations bring workers, these workers need places to live (you're welcome multi-family landlords) and these workers shop (you're welcome retail landlords).
While talking to businesses all over the city about finding office, retail, or warehouse space for their company, a question that regularly pops up is whether or not the services of Houston commercial real estate brokers are needed when negotiating lease renewals. The short answer is ABSOLUTELY!
We've now heard rumors from several sources saying that the Galleria Houston retail space for lease currently occupied by Borders, could be the new location of hot clothing retailer H & M. The news coming out last month that all Borders locations will close nationwide, left questions as to what kind of large big name retail tenant could fill the sizable void in the Galleria left by such a large brand. We may have an answer, although it seems a little early to be sure.
In Houston and throughout Texas, one of the best franchises around is Texadelphia. The cheesesteaks and queso are ridiculous and the space the franchisee chooses usually fits in with the community and is a great place to grab a bite (see Rice Village, Westheimer, or Cy-Fair).
Prospective Tenant – “Hey Dave, I just drove by a space and saw your name on the sign at the corner of Kirby and Richmond. It is in an incredible location and would be the perfect spot for my business."
Condemnation is a term that describes a government entity’s taking property through eminent domain. A commercial lease in Houston may be affected by condemnation through partial taking, in which an adjacent property or part of the property is taken, or it might be affected by total taking, in which the entire property is taken.
How's this for a traditional bank? Frost Bank opened state-of-the-art branch in Rice Village, which made for another of the more interesting new Houston commercial properties. Here's the kicker, it's not just a place for banking transactions, but can serve as an alternate location for businesses, organizations, and boards to hold special events and meetings. This kind of complex shows how cutting edge properties can diversify and get the most use out of a single location.
We had been anxiously waiting to go visit 8th Wonder Brewery; especially after all the press they had been receiving from Swamplot and CultureMap in Houston lately. We met one of the Co-Founders, Ryan Soroka at their newly leased location in downtown Houston (specifically Eado). You could see the excitement brewing (sorry couldn’t help it…) as he unlocked the door and rolled up the metal bay doors to his soon to be converted industrial space in Houston.
This week we are featuring the office of New Regional Planning, a full service real estate strategy and consulting firm based in Houston. I had heard through the grapevine that New Regional Planning had one of the most unique offices in the entire city, and we were lucky enough to be able to stop by and take a peak. It didn’t disappoint.
Check out Jonathan trying to find Houston office space!
In an effort to begin to understand the process and where the different people fit within the commercial leasing process, we are going to start a weekly series, The Players.
With the summer winding down (in calendar days, definitely not the heat...), let's take a look at a mid-year office market update and see how Houston stacks up against some other big markets in the country. According to CoStar U.S. office leasing remained very strong, despite slower than expected job growth. As we alluded to in our 2011 Q1 report, Houston office tenants have been taking advantage of very favorable concessions (i.e. giveaways from landlords) and rental rates and upgrading to nicer facilities offering bargain lease terms. The trend seems to be carrying on.
Building Class for commercial real estate in Houston refers to the quality of property. Class A office buildings are Generally 100,000 sq. ft. or larger (five or more floors), concrete and steel construction, built after 1980, business/support amenities, and well located with great traffic access. These properties are usually very well-managed with on site support day in and day out. Class B buildings are typically renovated and in good locations. Newer buildings are smaller in size, could be wood frame construction, and/or in non-prime location. They still have high quality management and tenants. Class C buildings refer to older, un-renovated and of any size in average to fair condition. Building infrastructure and technology is outdated. You'll often notice older/slower elevators, low ceilings, smaller bathrooms not in pristine condition, and poor parking conditions when touring a C class building.
In our attempt to show the world all of the different office leasing options in Houston, we came across another great concept that's perfect for entrepreneurs, start-ups, or anyone looking for their own desk or Houston coworking spaceaway from home.
The news broke a few days ago that the Borders Bookstore chain has filed for bankruptcy and will likely see close to 400 stores close down nationwide. Houston will most likely lose it's remaining five Houston Borders locations, which will add to the large amounts of vacant Houston retail space the city has been carrying for years. Not long ago we saw another big box retailer, Circuit City, share a similar fate and some of those vacancies have yet to be filled nationwide.
After reading, Where Real Estate Listings Fail, we thought we would address how this translates to the search for office space listings online. You would think looking for commercial real estate to lease in Houston would be easy in this technology driven age (I mean I can find the best chinese food within a mile on my iPhone in seconds). This is not for lack of trying... there are hundreds of websites dedicated to listing properties, which include many attributes, including photos, descriptions, and prices. What consumers do not know is that online listings can be dangerous and counter-productive for a few reasons.
Mashable recently had an interesting post, The Love Equation: How Match.com Calculates Your Ideal Mate. Since one of TheSquareFoot’s goals is help “match” you to the right resources to lease commercial property (whether it be the right tenant broker or empowering you with educational content and tools), I thought it would be interesting to look at the most interesting similarities between Match.com’s equation and TheSquareFoot.
In the landlord-tenant relationship for an office in Houston, commercial lease default occurs when the tenant fails to pay the proper rent in a timely manner. As a safety net, landlords commonly require a new tenant to pay a security deposit, which may be used to offset defaults in payment of rent and other monetary obligations under the rental agreement. Generally, the landlord is required to give the tenant notice of the default before eviction or the application of the security deposit proceeds to the payment in default. The fixing of a definite default date for payment of rent can be critical if it becomes necessary to evict a tenant for a default in the payment of rent. Houston commercial landlords may often require a background and/or reference check on prospective tenants in an attempt to minimize defaults in rent payments.
This article from yesterday's Wall Street Journal discusses the "widening divide" seen in the recoveries of suburban and central business district (CBD) properties following the Great Recession. As usual, most of the data highlighted in the article centers around the major East Coast markets of New York, Washington DC, and Boston. The trends seem to pervade other markets as well, with Houston commercial real estate being not all too dissimilar.
Written by: Ben Debayle, a tenant rep broker with The Finial Group specializing in greater Houston.
In this blog post on Globe St, Tony LoPinto (their recruiting expert) discusses recent decisions by Google and Twitter to locate their employees in city locations. He notes that this a new trend, different from days past where technology companies choose offices in suburban locations. Google's purchase of 111 Eight Ave at the end of last year was the largest purchase of commercial real estate by a tenant in US history. Sorry Chevron.
Since we are obsessed with improving the process for finding office space in Houston, it is only natural we also love finding really cool and unique spaces. Every week, we are going to feature a new office space in Houston and our first feature is Primer Grey. Primer Grey is a marketing design firm in Houston and they office in East Downtown Houston (the hip people call it EaDo).
I came across this Houston commercial leasing news item about Boxer Property signing a 20,000 sf lease at its Arena Towers location on Highway 59 and Fondren, and thought I'd share my thoughts on the property.
As a CPA, tech, and CRE geek (I am the life of the party...), I found the recent article on Globe Street pertaining to the new commercial real estate leases accounting rules particularly interesting. The article points out the uncertainty surrounding when the new lease accounting rules will come into place. Having experience in the accounting world, uncertainty and drafts constantly changing is nothing new. What is interesting is the type of personalities at play between folks in the commercial real estate in Houston world versus the accounting world. From dealing with both sides, I will let you guess who would be more fun to converse with in a social setting...
I've now seen two separate articles in the last several days about how available large blocks of Texas office space are decreasing. Our friend Coy Davidson was commenting on the Houston market over the weekend (does he ever sleep?!?) noting how the increased leasing velocity in the city has led to fewer options for tenants needing large spaces. This lovely graph shows the decreasing availability quarter-over-quarter for the last 3 quarters. In all three buckets, the number of available spaces has decreased by about 20%. This is great news for the landlords but it leaves fewer options for tenants looking for Texas office space
In commercial real estate in Texas, Lease Holdover (aka Tenancy at Sufferance) occurs when a tenant remains in the property after the expiration of the lease. The tenant can legally continue to occupy the space as long as the landlord continues to accept rent payments. If the landlord ceases to accept rent payments from the holdover tenant, it is considered trespassing and the landlord can then evict the tenant and force the tenant to vacate the property at any time, and without notice.