Monday, November 20, 2017

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Sunday, November 19, 2017

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Saturday, November 18, 2017

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Friday, November 17, 2017

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One of the biggest mistakes I see companies make when renting warehouse space is that they start their search too late https://t.co/hTlLOsNhgG


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Thursday, November 16, 2017

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Wednesday, November 15, 2017

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What is the Definition of Tenant Improvements & Build out?

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tenant improvements definitionTenant improvements, also known as Leasehold improvements are the custom interior finish outs a landlord or tenant makes to a commercial rental space (office, retail, or warehouse space). The amount build out to be completed or the tenant allowance needed to do the tenant improvements is typically negotiated up front between the landlord and tenant and is part of the overall commercial lease agreement.

Before signing lease it’s important that you understand what the tenant improvements will cost because landlord will agree to only cover the cost of $xxx amount. If you are a new business you want to keep your costs low so you may want to find a space that does not need much interior finish out work. Depending on the spaces previous use the space could need A LOT of work or not much work at all to suit your needs. They key is however to get a preliminary  construction bid before signing a lease so you have an idea of what the finish out cost will be AND how much of the tenant improvements the landlord is willing to pay for.

Also, as you plan your tenant improvements it’s important that you consider the company’s culture and how it will use the space. According to furniture company, Homes Direct 365 first impressions are everything. For both your current and future employees and clients. Branding in your entry ways, reception areas, and conference rooms are important and the use of furniture pieces, accent colors and lighting elements will help you emphasize your brand.

How Much Will Tenant Improvements Cost?

The cost of tenant improvements and the time needed to do them depends on the existing condition of the space. If it’s in shell condition (meaning it’s a brand new space that has never been built out) then the tenant improvements will be more expensive and take at least 3-4 months depending on the city you are in. If it’s 2nd generation space (meaning the space has been finished out and occupied before) it will typically cost less to do the tenant finishes and won’t take as long to do them. Now if you are completely changing everything in a 2nd generation space then then obviously the cost and time will increase.

definition of tenant improvements & build outWhat May be Included in Interior Commercial Tenant Finish Outs?

  • Demo or remove existing walls
  • Build or construct new sheet rock walls
  • New flooring such as carpet, laminate, or hardwood floors
  • New paint
  • New blinds
  • Electrial
  • Plumbing
  • HVAC (heating ventilation air conditioning)
  • Disability changes or upgrades
  • New dropped ceiling or exposed ceiling
  • Windows next to office doors called side lights
  • Anything else previously negotiated with the landlord

What is Not Typically included in Tenant Build Outs?

  • Proprietary trade fixtures
  • Office Furniture
  • Above standard upgrades
  • Building exterior signage
  • Etc
  • Data and phone cabling

Tenant improvements are required in most commercial spaces as it’s very rare that you find a space that meets your needs exactly. Some sort of interior build out will typically be needed. It’s important that you negotiate a favorable tenant improvement allowance with the landlord so you can minimize your out of pocket costs to cover the rest. Consider hiring a good architect that can help you determine what tenant finish outs you want to do. 

If you have any questions about tenant interior build outs don’t hesitate to give us a call. 

The post What is the Definition of Tenant Improvements & Build out? appeared first on Austin Tenant Advisors.

Austin Houses & Homes Rented for Commercial Space

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house used for commercial space austinSome companies that lease commercial space in Austin, Tx prefer to rent space in an old commercial house or home typically because they don’t like the corporate feel of a professional multistory office building. Before doing this it’s important to confirm that the house is zoned for commercial use otherwise they could be asked to move out even if they purchased the building or signed a long term lease. Finding an old house zoned for commercial use in Austin is not easy to find and renting them does have advantages and disadvantages. Most of the old houses have a lot of quirks and typically require more tenant or owner management than a traditional multi-tenant office building. Before deciding to lease a commercial house it’s important that you determine what sort of culture you want your company to have. What type of employees will you be recruiting? Depending on the type of industry you are in it could be hard to recruit employees (especially executive level) if you rent a commercial home. Renting old houses for commercial use is not for everyone. Below are a few advantages and disadvantages that you should consider before doing so.

commercial houses in austinWhere are Commercial Houses in Austin Typically Found?

Commercial houses in Austin, Tx are typically found in / around the central business district (aka around dowtown and central Austin). Depending on the location they can be used for office space or retail space. You can sometimes find them in suburban areas however in Austin it’s not as likely.

Advantages of Renting a House Used for Commercial Space

  • Having your own entrance makes it easier to access then having to enter into a common area lobby, go up an elevator, etc.
  • You don’t have to pay for common area like you do in a multitenant commercial building
  • Commercial homes feel more laid back then professional building
  • You typically have more flexibility in how to decorate and personalize the space
  • You get to park right in front of your commercial house
  • You will have your own bathroom
  • You pay your own electric which means if you work a lot of after hours you won’t incur hourly HVAC fees like you do in a traditional building.
  • They typically have a cool eclectic vibe

Disadvantages of Leasing a Commercial House

  • You might be responsible for maintaining the lawn
  • You will have your own bathroom to clean 🙂
  • Landlords typically ask that you maintain and repair if needed the HVAC units
  • Very expensive to modify. In a traditional office the sheetrock walls only go to the ceiling grid making it easy to remove and/or add walls. In an old house many of the walls are load bearing making it expensive to remove them.
  • No expansion space. In a multi-tenant building you may have an opportunity to lease more space if needed. In an old commercial home if your company grows your only option would be to relocate.
  • The house has to be commercial zoned for you to be able to rent it for commercial use

Those are just a few things to consider when leasing an old commercial house in Austin, Tx. If you need help finding office space in Austin feel free to give us a call at 512-861-0525

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Tuesday, November 14, 2017

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Monday, November 13, 2017

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What is Commercial Real Estate?

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what is commercial real estateWelcome to the exciting world of commercial real estate! you know more about it than you realize. Do you shop? Do you enter office buildings? Do you live in an apartment? Perhaps you own or rent warehouse space, retail, or office space?

Unlike residential real estate, which is based upon personal desires, commercial real estate is leased or purchased by businesses who select the space they do because it is right for their business. Is there a reason a grocery store wants to be on a certain corner? Why do all the drugstores seem to be near each other? Why is their a Burger King next to every Mcdonald’s? Is one corner better than another? Is the location of the skilled labor pool critical for a large manufacturer? The answer to all of these questions is Yes!

The term commercial when referring to real estate can mean different things in different places. Most people use the term to refer to nonresidential property. In some cases, the brokerage of large multifamily properties such as apartment complexes, is included as part of commercial real estate because the brokerage is considered investment sales. The purchaser is typically an institutional investor, such as a  pension fund, real estate investment trust (REIT), or a life insurance company.

In commercial real estate, there are even more avenues and more distinct types of avenues than in residential real estate. The following are some of the major categories of commercial real estate.

  • Land
  • Retail 
  • Office Buildings
  • Industrial & Warehouse Developments
  • Institutional
  • Investment
  • Resort/Recreational
  • Multifamily properties
  • Special Use Properties (e.g. Churches)

Keep in mind that these categories overlap and there can often be sub-specialties within each category. If you would like to know about the Austin commercial real estate market feel free to give us a call.

 

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Leasing Commercial Space – Create a Monthly Budget and Stick to it!

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commercial real estate space budgetWhen leasing commercial space businesses need to have a budget and stick to it! I see too many businesses spend more money on rent than they should or that they can afford. For example they will tell me that their maximum budget is $7,000 per month and then they will ask to see commercial spaces that are in the range of $10,000 per month.

Of course everything is negotiable however in a strong commercial real estate market if a landlord is asking for $40 sf in rent they are not going drop their rates to $25 sf. 

There is no point in looking at spaces that are WAY more expensive than you can afford. Unless you are able to increase your budget you will be wasting a lot of time and effort. You need to create a proforma that has your sales projections for the next 3-5 years which will be the commercial lease term you end up having to commit to. Most industries have an average commercial rent to sales ratio that helps them determine their maximum commercial rent amount. If you purchased a franchise the franchisor will be able to tell you what the ideal monthly rent should be. Once you determine the maximum monthly rental amount go look at only those commercial spaces that fall within that range. You may see a few spaces that you absolutely love and that are way over your budget, however don’t talk yourself into thinking you can make it work. Your numbers don’t like so you want to stick to those. Remember that most businesses go out of business within the first few years of being open. You will be one of the statistics if you don’t stick to your commercial rent budget.

Ideally most businesses would want to keep their rent to gross income percentage of about 10% or below. In the restaurant industry this should typically be 5% to 8%. If your business has low gross profit margins then you would want to maintain a lower rent percentage so you can be profitable. 

Leasing commercial space is one of the largest expenses you will have as a business owner or company. Whether you are renting medical office space, warehouse, retail, or office space it’s so important that you have a business plan and create a budget that makes sense for your business. Once you have that budget stick to it!

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Sunday, November 12, 2017

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Percentage Rent When Renting Retail Space

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percentage rent leasing retail spacePercentage rents are another way for landlords to collect money from tenants who lease retail space. Not every landlord will require that tenants pay percentage rent. It really depends the market you are in, the location of the shopping center in your city, and the landlords preference. Minimum rents are estimated by the landlord to cover operating costs, ground rents if any, and debt service on loans. Percentage rents create the landlord’s profit potential as the property matures and draws more sales volume.

Some tenants, banks for example, escape percentage rents because they draw considerable traffic to the center. Also, second story space is usually not attractive to retailers (due to presumably reduced foot traffic-except in malls) and it is often converted to office use, thereby skirting percentage rent. Leases for these tenants will normally contain periodic rent increases, or be limited to short terms, in order to give the landlord an opportunity  to periodically increase rents.

Tenants Position on Percentage Rents

While the percentage lease allows the tenant to minimize the base rent, the tenant is not guaranteed a profit just because rent is based on sales. Successful retailers know the numbers of their business. To ensure the success of the business, it behooves both the tenant and the landlord to keep the actual percentage of sales within a comfortable range of profitability, projected on the basis of sales dollars per square foot. Restaurants for example generally cannot operate profitably with rents above 8 to 10 percent of gross sales. A variety of publications list commonly used percentages for various types of businesses, or the tenant may consult a commercial real estate broker or appraiser. Astute landlords will be skeptical of tenants willing to pay above average rents

Types of Percentage Rent Retail Leases

Percentage rents may be computed on “gross sales” or on “net profits”. Because of the problems, and let’s face it, the abuses that can crop up in computing “profit,” most leases are based on the tenant’s “easier to determine” sales.

  • “No Minimum; percentage only” – Very large retail chain stores will not readily agree to a minimum rent for a new and unproven location. They obligate the landlord to share the risk of developing the property’s desirability  by agreeing to pay a percentage only. Smaller retailers might get away with this type of lease on a secondary site, or in an extremely overbuilt market. The landlord must be careful that such deals do not impede financing, since lenders typically consider minimum rents as their security when underwriting a loan.
  • “Percentage against a minimum” – This method provides the landlord minimum rent for the coverage of operating expenses, loan payments, and ground rent, while still creating upside potential from percentage rent. It also allows the possibility for escalating the minimum rent annually as operating costs increase, or as mortgage or ground lease payments escalate. This is probably the most commonly used method.
  • “Minimum plus percentage” – The percentage can be based on the total sales volume, or on sales in excess of a stated amount. The minimum rent can be fixed for the lease term, graduated periodically throughout the term, or conditioned on the tenant achieving specified sales volumes. Obviously, the exact combination must be negotiated. Only the most energetic landlord’s use this type of lease.

Sometimes tenants try to negotiate a “cap” or limit on percentage rents. Needless to say, landlords resist this because it defeats the main purpose of the percentage rent clause………which is to protect the landlord against inflation, and create profit potential by sharing in the increased value of the site.

If a landlord is asking you to pay percentage rent make sure that you understand what that means to your business. Project your annual sales for the next 3-5 years and calculate what you might be required to pay. Percentage rent is a negotiable item when leasing retail space. If you need help just contact our retail space experts or give us a call at 512-861-0525

 

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Domain Commercial Real Estate District Office Space For Rent

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domain commercial real estateThe Domain commercial real estate district is a 1.19 million square foot outdoor lifestyle center located in Northwest Austin at the corner of Braker Lane and MoPac Expressway. It has evolved into another Downtown Austin and is considered one of the premier mixed-use developments in the Southern United States with with retail, residential, and entertainment attractions. There are currently over 115 retail stores, 800 residential apartment units, 4 onsite high end hotels, and plenty of class A office space for rent. If you are a business that is considering opening a satellite office or relocating to Austin The Domain is the place to be. 

If you are interested in leasing Domain office space or retail space give us a call and we help you find & negotiate great space. Just call 512-861-0525

The Domain Area is a Thriving Community

It’s estimated that over 824,000 people live within a 10 mile radius which is roughly 43% of the Austin Metro population. Within the next decade the Domain District is projected to employ over 12,000 people and house over 6,000 residents, and it’s location at Braker and Mopac make commuting easy and convenient making it easy for companies to recruit and retain top talent.

Commutes From Domain Commercial Real Estate District

  • 15 minutes to the University of Texas
  • 20 minutes to Downtown Austin
  • 25 minutes to the Austin-Bergstrom International Airport
  • 15 minutes to Cedar Park
  • 15 minutes to Round Rock
  • 20 minutes to Westlake
  • 25 minutes to Lake Travis

With its impeccable retail selection, amazing array of restaurants, outstanding amenities, and exciting events throughout the year, The Domain Commercial Real Estate District offers nothing short of a world-class shopping experience. For information about leasing office or retail space here contact us at https://www.austintenantadvisors.com/ or call 512-861-0525

 

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How To Calculate Commercial Rent

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how to calculate commercial rentWhen comparing commercial spaces to one another it’s important that you know how to calculate commercial rent so that you can budget appropriately for your business. The last thing you want to do is sign a lease and find out after that you miscalculated and blew your budget.

It can be confusing sometimes because commercial rental rates can be quoted differently depending on the city you live in or who owns the property.

For example one commercial landlord may quote a monthly rental rate (e.g. $1.00 sf per month) while another may quote a yearly rental rate (e.g. $12.00 sf per year). In most cases commercial industrial warehouse spaces are typically quoted as monthly rates and office & retail spaces are quoted as yearly rates. Sometimes you will find industrial spaces quoted as yearly rates as well.

In the example above $1.00 per month is the SAME as $12.00 sf per year. Now keep in mind most commercial properties are triple net (NNN) leases, meaning in addition to the base rent you also have to pay your portion of the operating expenses (taxes, insurance, maintenance). Loopnet can be a bit misleading sometimes because that website typically only shows the base rent. In most markets like Austin, Tx you will also be responsible for the NNN). If you don’t know make sure you ASK and find out ALL the costs that you will be responsible for. Let’s take a look below at how to calculate commercial rent when landlords are quoting either a monthly or yearly rental rate.

Calculating the monthly commercial rent

Lets say you want to rent 5,000 sf of commercial Industrial space in South East Austin and the landlord is quoting $1.00 sf per month.

  • 5,000 x $1.00 = $5,000 per month

Calculating the yearly commercial rent

This time let’s take a 5,000 sf commercial warehouse space in South Austin that the landlord is quoting $12.00 sf per year.

  • 5,000 x $12.00 = $60,000 per year. 
  • $60,000 / 12 months = $5,000 per month

Again, as you can see $1 sf per month is the same as $12 sf per year. Also make sure to ask the landlord if you are also responsible for paying the NNN costs. In most industrial markets you will have to pay those as well as the base rent. It’s important that you know how to to calculate commercial rent so you can create a realistic budget for your business. One mistake can cost you thousands! 

If you have any questions feel free to contact us.

 

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Saturday, November 11, 2017

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Friday, November 10, 2017

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Commercial Space For Rent Austin Tx and Your Corporate Image

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commercial space for rent in austin txDifferent businesses have different space image and type requirements. You wouldn’t expect to see a law firm interior /image in a doctors office. Most software and tech companies that come to Austin prefer open office layouts with a few offices and/or conference rooms, and are investing a lot of money for above standard finishes to help them recruit and retail employees. Some companies prefer to lease space in a downtown Austin office high rise. Others prefer to rent commercial space in the suburbs of West Austin.

At the end of the day when touring commercial space for rent Austin Tx it’s important that you discuss the corporate image that you want to have with your Austin commercial realtor. They will be able to educate you on the market and help you find space that meets your corporate image needs.

What corporate image do you want your commercial space in Austin to portray?

  • What particular buildings are of interest?
  • Do you plan on having a lot of high level executive meetings at your office?
  • Will clients visit your space?
  • How do you want your clients to think about you when they visit your Austin office?
  • How do you want potential employees to think about your company when they come for an interview?
  • Is competition high for good talent in your industry?
  • Do you want to have a downtown Austin image or do you want to be in the Hill Country?
  • Is an office with a view important?
  • What is the lowest floor your company would be willing to occupy?
  • What building amenities are important?
  • What level of finish are you willing to accept?
  • What are your parking and transportation needs?
  • Here are a few other factors to consider when choosing your Austin commercial space.

Depending on your business the commercial space you rent say’s a lot about your corporate image. Your corporate image says a lot about who you are and it creates a sense of trust in the marketplace. Recruiting and retaining top talent is very challenging in Austin. As you look for commercial space for rent Austin Tx make sure to think about how it will make your clients, employees, prospects, and competitors feel about your company.

Obviously there are a lot of other things that have an impact on your corporate image. Your commercial space is only one of the tools in your tool belt, however it’s one of the things that you do have control over. 

 

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Thursday, November 9, 2017

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Negotiating Techniques to Use to Lease Commercial Real Estate

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techniques used to negotiate commercial leaseEvery one at some point in their life has negotiated something, however those that learn and use good negotiating techniques will ultimately do better than others. Negotiations are a part of every aspect of your business and personal life and the techniques you learn can be used in any setting.

Take commercial real estate for example. If you own or run a business you will eventually have to negotiate a commercial lease or purchase. Whether you lease retail, office space, or warehouse space knowing how to negotiate will help you get a better deal. The key to remember here is that BEFORE you start negotiating you MUST do your homework and have all the information necessary to equip you to negotiate better.

Below I have outlined 7 negotiating techniques that IF USED will help you get a favorable deal when leasing or buying commercial real estate. Now by no means is this a complete list however using some of these techniques will give you an advantage over others that don’t use them.

Commercial Real Estate Negotiation Techniques

1. The Walk Away

One of the simplest techniques that is empl0yed in negotiating commercial leases is the walk away. One party gets up and walks away from the deal. Not because they don’t want the deal, but because they want to test the resolve of the other side. It’s also important to understand that is may backfire. It is kind of like bluffing in poker. They may call your bluff. So in order to employ this technique it is important to be serous about letting the deal go if you have to. The best result of  a walk away is that the other side calls you back to make the concession that you walked away about. If someone walks out on you, you need to know how important each concession is and be willing to call someone back if you are willing to concede. Don’t just give in when you call them back though. Call them back by saying that you will concede on this issue if they will concede on another. This lets them know that you want to continue, but that you are also not a push over. When the other side walk away, it can sometimes be a great time to ask for significant concessions because they may be looking for a way to come back. They may have bluffed and could be hoping that you don’t call it.

2. The Absent Authority

This is a common and powerful technique that allows you to slow down making concessions and many times eliminates the request for concession from the other side. It is simply the technique of telling the other side that there is someone that you need to get approval from before making the decision to lease commercial space. If you find this technique being used by the other side, then simply request to know the authorities opinion on something before making a concession. In other words say, “I’ll consider that if I know for sure that your associate will agree to it.” This will kill their attempts to pin you down and cause them to either get approval or admit that it is not that important

3. Set Deadlines

When you set the deadline you control the negotiation. Because approximately 80% of the agreements are reached in the last 20% of the negotiation, it is important to understand that the person who sets the deadline manages this aspect of the negotiation. And be aware when others invoke deadlines. As your deadline approaches, the more likely it is that the other party will concede to your demands. Combine the power of competition with your deadline to increase your effectiveness. Suppose that in negotiating the commercial lease terms I say, “It’s been yours and one other property.” If we are apart on an economic issue, I can say that I want to give this further consideration. “I’ll give you my final determination on Friday”, if they want to wrap up the deal sooner, they may need to make some additional concessions.

Always test the other party’s deadline. When the other party is attempting to set the deadlines, it is important to question their deadlines. If they say to you, “I need your answer by Friday morning”, don’t acquiesce without finding out why. Good responses to this statement would be: “Why Friday?” or “Do you have another prospective transaction for this space?” If they answer “yes” to this last question asked, “How long have you been working with them?” or “How far along are you in that deal?” Dig into this issue to test its veracity. The more you question, the better your chances are of eliciting responses that will restore the negotiating to you.

When you set the deadline you have the power to change it. Extending a deadline is a delicate aspect of the commercial real estate negotiating process. It is a technique that can be used to your advantage, but it should be used infrequently. Continually extending deadlines can be misconstrued. If you call me on Friday and ask “What is your decision on leasing our warehouse space?” I would probably respond by asking you about a deal point I want a concession on. If you decline to concede this point I may consider re-establishing my deadline to allow you time to reconsider. I might say, “I haven’t had the time to reach my decision yet. However, unless you can meet my needs by Wednesday I’ll probably take another property. How about calling me back Wednesday or sooner if you change your mine?” They key here is to recognize the other party’s attempts to control the deadline and establish your own deadlines.

4. Nibbling

Nibbling is asking for additional concessions after agreement. It uses the concept of commitment and consistency. Whether you choose to use nibbling in your negotiations is a personal decision, nevertheless, you should know about nibbling. The most common form of nibbling occurs when you have just purchased a car. After you make your deal, the car dealer offers to sell you an array of options. The dealer knows that you are most susceptible to buying these items immediately after make the big decision. These items are loaded with profit for the dealer. The selling or negotiating that goes on just after the sale or agreement has been reached  is called nibbling.

There is tremendous tension during the negotiations for both parties. That tension is released when the agreement is reached and both parties feel a great sense of relief at the moment of agreement. This is when the nibbler casually presents one or two additional requests. Often they are couched inn an assumptive closing statement. The other party, not wanting to reopen the negotiation and risk losing the deal quietly goes along.

The primary defense against nibbling is to make the nibbler feel cheap. Another defense is to offer to re-open the negotiation. Remember that the other party feels the pressure too and probably is not inclined to re-open the negotiation. Another defense is to invoke the absent authority and defer the decision to them. It’s easier to say no to a nibble when the glow of a successful negotiation has faded. Remember that at the moment of agreement you and the other party are both susceptible to give up additional concessions. Prepare your defenses against nibbling in advance and anticipate that they may come.

5. Grinding Away

Have you ever felt as though the other party will never stop coming back for more during a negotiation? That each time you get close to an agreement the other party makes additional demands? That they are grinding away and you are powerless to stop them? This is known as grinding and there are several good defenses against this. Always ask something in return for each concession you make. This is called trading off and it is important to a successful negotiation because it creates value in the concessions you are making. No matter how inconsequential the concession may seem to you, developing this practice of asking for something in return. In developing this practice know that timing is important. Take time to consider carefully the other party’s demands to avoid responding too quickly. Overly quick responses tend to send the message that you don’t take the demands seriously or that you are trying to shift away attention from the issue.

There is a a principle that says that the value of services is greatly diminished after the services have been rendered. For this reason it is better to ask for a trade off when you make your response rather than save it for later. However, if you have established value in your concessions by asking for something in return, even if you don’t get it, you can say “We did that for you back then, now we want you to do this for us”

Withdraw a prior concession to send a strong bottom line message. Grinders need to be told when to stop. When you take something back that you have previously given up you are sending a bottom line message that says, “We have gone as far as we will go and if you keep asking for more, we will need something back.”

6. Re-framing Questions

A re-framing question is a technique that some negotiators use to redirect or change the original focus. This technique is a valuable one to both who use and recognize a re-framing question. In a negotiation pay close attention for subtle re-framing sentences like “I think the question we need to ask here is…” Chances are they are about to attempt a reframe. The way to counteract this is to listen carefully to what is being said. Do not agree with it if it does not focus the negotiation on the points that you need to focus on.

7. Controlled Emotion

There are negotiators that have mastered the use of controlled emotion as a negotiating tactic. The most recognizable are flinching, showing anger and the walking away.

Have you ever been in a situation where after quoting your asking price the other party physically flinches and says, “I had no idea you were asking that much! I’ll never pay that price!” If you reacted by lowering your price or offering some other concession, you probably fell prey to the flinch. To defend against the flinch you must first recognize it for what it is. Flinching is both an opening gambit designed to lower your expectations and more important, it is an expression of interest. Respond calmly; imply flexibility without making a specific concession, then turn the discussions to the benefits of your tenancy. Attempt to get the other party of make the first offer, to establish the bottom of the settlement range.

Sadly, some people still use anger to gain concessions in negotiation. This tactic is designed to get you to deal with the other party’s emotions rather than the issues. We often find this tactic tied to the walk away. The best defense is to focus your attention on the movement of the goal concessions as they cross the table. Keep your attention on what is going on with issues and not what the people are doing in the negotiations.

Again there are many more negotiating techniques that you can use when negotiating commercial leases however the 7 listed above will get you started. You always want to ask for what you want however just keep in mind you won’t always get it. Don’t let you emotions get in the way during negotiations AND make sure you give yourself plenty of time before you need space or your existing leases expires. Good commercial real estate negotiations take time.

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Wednesday, November 8, 2017

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Have a Budget Before Searching For Commercial Real Estate Rentals

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commercial real estate monthly rental budgetIt’s amazing to me how many individuals and companies start their search for commercial real estate space (office, retail, warehouse) without knowing how much they can afford to spend on rent each month or year. Some will say they can’t establish a budget because they don’t yet know what things will cost, however at the end of the day it’s important that you have a maximum dollar in mind BEFORE starting the search.

Considering that your monthly commercial rental expense is, for many businesses, the 2nd largest expense a business may have next to salaries, it is important that the person responsible for choosing office space both understand and is comfortable with the company’s rent expense exposure. It is important to know your price range before looking at office space to eliminate wasting time and money reviewing spaces that you just can’t afford.

Unfortunately, there is no exact science or formula to get a defined answer to this. If I were to arbitrarily say that your rent budget should be 20% of your annual overall expense budget it would be a disservice to small and large companies alike. A large law firm, in many cases, may have the revenue stream to support a rent payment that is much higher than a non-profit organization. If we were to use this 20% rule here, it may be a deal for law firm office space but a burden for the non-profit company.

The key in most cases is to not get emotional about the commercial space. Remember, this is a business decision and one that could have a major impact on the success or failure of your company. Do the math! Make sure that you know what your business can afford today and not what may put you out of business tomorrow.

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Austin Commercial Office Space Advisory For Law Firm, Attorney, & Lawyers

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law firm, attorney, lawyer austin office spaceIf you are a law firm, attorney, or lawyer and you need help finding and renting commercial office space in Austin you have come to the right place. Austin Tenant Advisors specializes in helping you in the search, selection, negotiation, and occupancy of office space in Austin Tx. 

To get started now call 512-861-0525 or fill out this Austin office space search form.

Because we only represent Tenants and Buyers in commercial real estate deals there are no conflicts of interest. That gives us the ability to give you unbiased feedback on every property and negotiate on your behalf. Law firm office space trends are constantly changing so we will represent your best interests to find space that is the most functional, efficient, and within your budget.

Law Firm Office Space Market

There are literally millions of sf of office space in Austin to choose from. Depending on what area of law you practice finding the right space in Austin can be very time consuming and difficult if you are not familiar with the area. Many attorneys want to be close to the State Capital and the growing tech sector. For others location is less important. Once we determine your space and business needs we will be able to identity the perfect location. Many lawyers like to have locations that are visible and easily accessible, have high end finishes, lots of hard-walled offices, and nice conference rooms. Additionally if they have large offices they like to have opportunities for building signage.

One of the great things about Austin is that we have one of the best Law schools in the Nation with The University of Texas School of Law which will give you a strong and abundant talent pool to choose from.

Whatever your business need we will secure the most efficient and functional commercial real estate deal that reflects your image and culture.

Our Austin Law Firm Office Search team is ready to help you find the perfect office space in Austin.

  • Find the perfect space and negotiate the best commercial lease possible.
  • Attract and retain lawyers
  • Reduce operating costs and improve space efficiency
  • Reduce your overhead while growing your business

To get start just give us a call at 512-861-0525

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Tips to Negotiate Your Commercial Lease Renewal

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commercial lease negotiation tipsWhen it comes time to renew your commercial lease the first thing most landlords do is present you a proposal that includes higher rents. What most companies don’t realize is that they don’t have to just accept their fate and simply pay the higher rent. 

As long as you don’t wait until the last minute and give yourself enough time a lease renewal situation is a great time to assess your current situation and future needs, research the current market to see what other options there are and the costs and compare to your current situation, and then use all that information to negotiate a better lease renewal contract.

Negotiating commercial real estate leases can be intimidating and complex. While negotiating commercial lease renewals is somewhat similar to new spaces they also have certain nuances that can put you at a disadvantage, especially if your attempting to go through the process by yourself.

If you do your research and become well informed on current and future market conditions you will get a better deal on your commercial real estate lease renewal.

Whether you are renting office space, retail, or warehouse space below are a few tips that will help you negotiate your next commercial lease renewal.

  1. Stay updated on your city’s commercial lease market conditions
    1. The more proactive you are the better the outcome. 
    2. Take the time to review your commercial lease at least once per year
    3. Start commercial lease renewal negotiations with your landlord at least 6-9 months before your lease expires. You want to have plenty of time for discussions AND enough time to relocate if you have to
    4. Keep tabs on the commercial real estate market (rental rates, new construction, etc) and compare those to what you are paying and what your building is currently quoting.
  2. Understand the landlords profit
    1. Obviously landlords make more money when renewing an existing tenant vs when doing a deal with a brand new one. When a tenant moves out the landlord could potentially go a few months without collecting rent on that space. Also they may incur additional expenses to release the space such as tenant improvement allowances for renovations, marketing expenses, etc. When you renew your lease the landlord will typically have fewer costs. 
    2. It’s important that you know your value as an existing tenant and leverage that to receive more concessions.
  3. Assess your existing situation and current and future space needs
    1. Review your existing space and how it helps you be efficient and productive. How can you improve in those areas? What is the ideal work environment? What amenities would you and your employees like to have? Can you improve upon the overall layout? Can you improve on the technology available to the building and space?
  4. Research other commercial space options in the market
    1. Even if you don’t want to move it’s important that you evaluate other options, prices, and amenities. You never know you may find a space that works better!
    2. Market conditions may have changed since you last signed your lease
    3. You might have access to amenities that you don’t currently have in your existing building
    4. Rental rates might be more favorable in other buildings
    5. If there are more favorable amenities and prices in other buildings use those as leverage to negotiate your commercial lease renewal.
  5. Have a plan
    1. Even if you don’t want to leave don’t let the landlord know this. Let them know that you are exploring all your options and could potentially move out if another building has more favorable deal points.
    2. Show the landlord that you have done your homework
    3. Present solid reasons why you are asking for better concessions. Base it off market data. Don’t just wing it.
    4. Ask yourself a lot of questions about your commercial real estate needs. What do you like? What do you dislike? What works and what doesn’t?
  6. Consider hiring a tenant representation broker to help you with the process
    1. If you are not familiar with market conditions and commercial lease negotiations
    2. If you don’t have the time to deal with it alone
    3. Good tenant representatives can help level the playing field and equip you with the knowledge and experience needed to ensure you negotiate a favorable deal
    4. They will help you fully understand your needs and goals

At the end of the day you want to ensure you give yourself plenty of time to plan your commercial lease renewal. You never know what you may decide after reviewing your current and future business needs. You may determine that you don’t actually need all the space you have and be able to negotiate to give back some of the space thus reducing your overhead. 

It’s important that you understand your value to the commercial real estate market and be able to articulate that to the landlord in a way that will ensure you get the best possible deal. If you need any help with your commercial real estate leases feel free to contact us.

 

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