When Does it Make Sense to Use a Broker to Find Office Space?

With the explosive growth of small businesses in the U.S., more entrepreneurs are finding themselves negotiating and closing leases without the help of a broker. While at times it makes sense to do this, using a broker in the right scenario can greatly assist in securing the best possible lease for you and your company.

Before deciding whether you need extra help, it’s important to understand what motivates brokers and how they can benefit you during a lease transaction.

Getting their attention. Knowing how brokers get paid is important to understanding their motivations — and why sometimes, they don’t return your calls. Most brokers get paid a percentage of your total lease value, which is typically between 3 and 5 percent. However, this often isn’t the full amount your broker will receive, as they usually have to share a percentage of their commission with their brokerage companies.

Getting to a signed lease can be a lot of work. This can involve conference calls or face-to-face meetings, searching for spaces that satisfy your requirements, setting up and attending property tours and actual lease negotiations themselves.

A broker will have to do these steps for a company regardless of if they’re looking for 10,000 square feet of space or 500 square feet of space, but the difference in size means that the amount the broker receives will be significantly different.

This is why you might want to — or have to — represent yourself in a lease transaction for a smaller space. If your space requirements are bigger or more complicated, then there are instances where using a broker may be in your best interest. To better understand the potential costs of working with a broker, check out our FAQ.

Knowing the landlord landscape. It’s tempting for experienced entrepreneurs to think that they can deal with the landlord directly and save money by not using a broker, expecting that the landlord will pass savings on to them. While there may be times when this is true, there are just as many situations where it isn’t necessarily the case.

While you might do a lease transaction every three to five years, brokers do many deals every month. The end result is that brokers are likely to know more about the landlords operating in the local area than you do. They know the property owning landscape well: who is flexible, who is motivated and who will go the extra mile to accommodate a tenant.

For example, let’s say you are a growing company with the stability to sign a long-term lease if desired, but want to retain a short-term lease for greater growth flexibility. In situations such as this, an experienced broker can guide you to spaces with landlords who are not only flexible, but can accommodate you in alternative buildings while under your current lease.

Let’s say you run out of space two years into a five-year lease, you may have the option to transfer your lease terms and move to a larger space in their portfolio. Additionally, as opposed to having to take a large space that is intended to be grown into, a broker may be able to negotiate rights of first refusal on adjacent spaces one or two years into your lease term, saving you from paying that rent from the onset.

Striking a creative deal. A broker may also be able to work out a plan that works best for your company’s financial needs by getting creative with how your rent escalation is constructed. If you are working on a product launch that runs on an 18-month cycle, a broker may work with you to escalate your rent accordingly instead of a traditional 12-month rent increase cycle.

If you are facing a scenario where you may have run out of space completely, they may even be able to negotiate a lease buyout with the landlord so that you can move into their new space without paying double rent.

There are no hard and fast rules on when to work with a broker. Before putting in a lot of work shaving a few percentage points off your lease by saving the landlord from a commission, ask yourself if you’re paying for something that you shouldn’t have to or if there’s any flexibility that is worth more to your company than the rent savings.

These factors could amount to much more savings than the commission saved and passed to you.

This article was written by Susie Algard and  originally featured on Entrepreneur.com. See original source here: http://www.entrepreneur.com/article/235529

Broker Banter – Questions & Answers (The Portland Chapter)

We’re the first to admit we don’t always have all the answers when it comes to the fine details of leasing and all the questions that come with it. That’s when we turn to our commercial comrades to aid with the broadening of our knowledge base.  This week we’ve gone straight to the source to speak with Portland, OR broker Kristi Ricker.

We connected with Kristi to talk shop, and in fact, where to set up shop.

OfficeSpace: What do you think is the most important question a tenant should be asking, that they never seem to ask when looking for space?

Kristi: Zoning, tenants need to learn more out about zoning. There are so many issues in this area and if you’re not aware of this in the beginning it could hurt your chances of securing your ideal space. It’s something you should ask your broker about as they’ll be able to determine how to move forward in narrowing down your search. It’s just not something that’s on the top of your mind when you’re looking for a space and it definitely should be.

OfficeSpace: What is the best tip in negotiating a lease you think all tenants should consider? 

Kristi: The longer the lease, the better you’re going to be able to negotiate, especially if you are going to need anything done to your space. People are nervous with the idea of securing a 5 year lease, they think “What if something happens?” – but they can always put a clause in allowing them to sublease (A lease of a property by a tenant to a subtenant.).

OfficeSpace: What do tenants focus on, that perhaps they shouldn’t when searching for space?

Kristi: Recently, I’ve had clients who have looked at a space and were concerned the buildings around it were being worked on or unfinished. Unfortunately, this doesn’t always paint a pretty picture of the neighborhood, especially when it’s an up and coming urban area. I recommend looking at the bigger finished picture and inquiring about what’s being developed in the area.

OfficeSpace: What area of town would you recommend to a Start-Up in Portland?

Kristi: The inner Southeast, Northeast and North Portland are very hot right now. They were predominantly industrial areas and now they’ve turned into these very creative pockets with great opportunities for startups, restaurants, retail and more.

OfficeSpace: What are you starting to see more of in Portland?

Kristi: Tons of startups, restaurants, breweries, delis – there’s a great food scene here.

OfficeSpace: And lastly, what makes Portland great?

Kristi: Portland‘s so diverse, we have a little bit of everything for everyone. Everything goes here – that’s what I love about it. I see all these new ideas here and they seem to work. If you have a crazy, fun new idea, there’s a great support network for that here. It just seems out of the ordinary things work here more than other places. Nothing is guaranteed but your chances of making it a go seems to have better odds in Portland.

Kristi has over 15 years of real estate experience in the greater Portland area and has recently started her own company.

Need Office, Retail or Industrial Space in Portland? Visit us here – OfficeSpace.com/Portland

Movin On Up (Part 2)

Chalkboards and Chairs and Chartreuse Oh My!

Last Thursday was the big reveal for our new space! This was it, a sneak peek at our new digs. (Side bar – the biggest concern when setting up a new office always seems to be the floor plan aka “who am I sitting beside?”. It may be engrained in us from high school but that’s okay because we’re all about embracing our youth here at OfficeSpace.com.)

Potential Floorplan (open concept) w/ Chalk “Brainstorming” Wall.

Amongst the concerns we laid out in last week’s blog “Movin On Up Part 1” were – what to do with our office furniture and whether or not we should design the space ourselves. Well, it turns out the best laid plans are ones that involve doing a bit of both.

1. For our furniture/supplies dilemma, we referenced Pinterest obsessively and tried to incorporate our own furniture with a few creative ideas from Pinterest ie. Our Chalkboard Wall.

2. We also figured out the most efficient way to get rid of the furniture we couldn’t re-use was to sell it to our neighbors in the same loft space. We already share the same esthetic and neither party had to travel far for deliveries and pick ups.

3. Despite our own in-house decorating efforts we still needed a bit of assistance so we hired a local designer to help walk us through a few things. Keep in mind small budget doesn’t equal 100% DIY. We were still able to bring on a professional who could help tie everything together and offer some affordable solutions.

4. In keeping with our brand identity we’ve decided to add accents like throw pillows and desk supplies in our team colors while keeping everything else “Ikea” white. This keeps costs down, is easy to refresh and won’t look dated in a few years.

Next Friday is the actual move and we’re sourcing things like gently used boxes for packing (more enviro-friendly/economical) and looking at how to introduce ourselves into our new subleased space which happens to be shared by a large Seattle web based business who has been kind enough to offer us our new home.

Stay tuned for the finished product and a new look at Chez OfficeSpace.com

Movin On Up! (Part 1)

Big News! We’re moving offices!

Our Current Space (the team hard at work!)

Yay! Streamers, confetti, balloons!

Excitement, pride, growth – all good!

Suddenly, those feelings were followed up by the pending loom of “ah nuts, moving means packing means boxes means design choices and so on and so on”… Just when we got comfortable and everything had a place. We needed to retreat to the “Living Room”..

The “Living Room”

Yes, there are many questions we here at OfficeSpace.com have now been faced with regarding our upcoming move. So we thought who better to share them with then you.

  • First we thought, what do we do with everything?
  • Do we bring our old furniture to the new location? Recycle it? Repurpose it? Resell it?
  • Start from scratch?
  • Hire a designer vs do it ourselves?
  • We’re a small team with a budget to match so how do we maintain our hip, cool, start up, tech office vibe we pin daily on our Pinterest board?

You might be asking, aren’t these some of the many things you deal with when tenants contact you about moving and finding office space through OfficeSpace.com? You’re absolutely right, but there’s something to the saying “walking a mile in someone else’s shoes”. So, as we continue our adventure over the next few weeks we’ll be sharing what we’ve learned and our progress as we approach moving day (October 5th!)

Do you have any office moving horror stories or perhaps any great recommendations or tips? If so, please feel free to send them our way.

P.S. We’ll be keeping this…

Obligatory “Office Space” poster