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Buddy Shaw
Shaw & Associates, Inc.
2802 Paces Ferry Road
Suite 100
Atlanta, GA 30339

T 770.850.0003
F 770.803.0916

officespace@mindspring.com

 

Frequently Asked Questions About Offce Space

                                        

  1. What is a Virtual Office?
  2. Do I need a Start Up Office, a Part Time Office or a Virtual Office?
  3. What is an Executive Suite?
  4. Is an Executive Suite the right solution for my office space?
  5. What is a Sublease?
  6. Is a Sublease a good solution for my office space?
  7. When do I grow out of my home office and what is the best solution?
  8. When does it make sense to look for a sublease?
  9. How do most tenants locate space?
  10. Isn't there an MLS system available?
  11. What Is a Tenant Broker?
  12. Why should I even consider using a tenant broker?
  13. What is so complicated about negotiating a commercial real estate deal?
  14. Do I know how to strategically go about the process of creating a competitive environment so that I might receive the most lucrative financial deal available? After all...Landlords make good deals and bad deals for themselves. How do I get the good deals?
  15. Will a commission always be paid to a broker after a transaction?  Is there a way to eliminate a commission being paid, because maybe I’ll benefit in some way?
  16. Do you only recommend options from a few partners that you are close with?
  17. What is the rental rate for your office space in atlanta?
  18. Are the quoted rates for the office space you are considering too high?
  19. Am I going to have to pay additional dollars towards the cost of my improvements or can I get the Landlord to pay for them?
  20. What do I do next after finding out that my improvement allowance is not sufficient to pay for building out my space the way I desire?
  21. How much space do I need? 
  22. What is Usable Area?
  23. What is Rentable Area ?
  24. What is the Load Factor ?
  25. Should I attempt to renegotiate my lease on my own?
  26. What will be my Landlord’s attitude toward me (a tenant) when its time to renew my lease?
  27. Should I attempt to contact my Landlord to renegotiate my lease before he contacts me?
  28. Do you also help renegotiate existing leases?
  29. My lease doesn't expire for several months. When should we begin thinking about our space needs?
  30. When is the best time to attempt to renegotiate my lease with the Landlord?
  31. Does it make sense to attempt an early renegotiation with my Landlord if I have two or even three years remaining on my lease term?
  32. Will my Landlord just cancel my lease if I want to move to another location?

 

 

 

Q.  What is a Virtual Office?

A.  Virtual Offices are locations designed for companies and home office professionals to establish a corporate presence, by facilitating use of, corprate addresses, telecommunications, day office and conference room services on an as-need basis.

 

Q.  Do I need a Start Up Office, a Part Time Office or a Virtual Office?

A. The Start Up Office, the Part time Office, and the Virtual Office are literaly the same. The first and most logical need is to office from your home. After all, you only need a desk, a phone, an answering machine, your computer and a professional address to send the checks to from the business you are generating from home. You can still work at home and have the appearance as though you are an ongoing concern with an official business address. This is the next immediate step in growing your business. You can get an official address for your company, someone to answer your phone and forward your calls to your cell phone or your business line at home for a very reasonable price. Once again, this is known as the Virtual Office.

 

Q.  What is an Executive Suite?

A.  Executive suites are shared offices with services provided by a management firm. Also known as "business centers", they are a great way for small companies to get off to a fast and low risk start and a great way for a fast growing company to have the flexibility for rapid growth. Unlike traditional commercial office space, executive office space offers flexible office space options, along with simple leasing arrangements.

 

 

Q.  Is an Executive Suite the right solution for my office space?

 The next immediate stop for the one man office would be to move your office into a location that has your own office for you physically that you would go to every day. You have an address with your phone answered, direct access to fast internet connections, fax and copies made when you need them, secretarial support on an as needed basis and even have access to a conference room if you need one. This is an ďExecutive SuiteĒ. Contact us at www.OfficeSpaceAtlanta.com for one of our professional placement advisors who will personally speak with you and walk with you through the entire process.

 

Q.  What is a Sublease?

A.  A sublease is a contractual agreement transferring some of the original tenantís rights to a new tenant. In exchange for these rights the new tenant promises to fulfill certain obligations: pay rent, pay utilities, etc. A person chooses to become a sublesee because a sublease often meets the tenantís needs by offering a shorter lease term, furnished unit, reduced rent, and more negotiable terms.

 

 

Q.  Is a Sublease a good solution for my office space?

A.  If you can find a resource that provides you with all of the available subleases in your marketplace (www.SubleaseAtlanta.com) itís like finding a gold mine! One of the best options a company could find is found in this kind of submarket. You have a highly motivated Landlord (Sublessor) with an uncommon desire to do whatever he can to cut his losses from a lease he no longer needs or wants. Rent rates are typically anywhere from 20-30% discounted up to as much as over 50% discount from the face rate of what the tenant is paying. Many Sublessors will offer free rent, office furniture and cubicle farms, telephone systems, computers and just about anything you could think of that involves the rented environment. In many cases yours for the keeping provided you satisfy all the terms of your sublease agreement.

 

Q.  When do I grow out of my home office and what is the best solution?

A.  If you are presently in a home office and do not need a full time office but you would like a professional presence, i.e. someone to answer your phone, an official office address and the possible use of a part time office then the Virtual office is the answer. Follow the links on the home page for information on quickly getting your company up and running in a professional and very reasonably price solution.

 

Q: When does it make sense to look for a sublease?

A: If you can find a resource that provides you with all of the available subleases in your marketplace (www.officespaceatlanta.com ) it’s like finding a gold mine! One of the best options a company could find is found in this kind of submarket. You have a highly motivated Landlord (Sublessor) with an uncommon desire to do whatever he can to cut his losses from a lease he no longer needs or wants. Rent rates are typically anywhere from 20-30% discounted up to as much as over 50% discount from the face rate of what the tenant is paying. Many Sublessors will offer free rent, office furniture, cubicle farms, telephone systems, computers and just about anything you could think of that involves the rented environment. In many cases the hardware is yours for the keeping provided you satisfy all the terms of your sublease agreement.

 

 

Q.  How do most tenants locate space?

A.  Typically they call off signs, ads or brochures. With limited access to comparative market data they are at a disadvantage at the bargaining table.

 

Q.  Isn't there an MLS system available?

A.  No. Unlike residential real estate, which has the MLS system, commercial real estate offers no comprehensive data base to the general public. Compiling objective information specific to your needs is very time consuming . . . We do it daily

 

Q  What Is a Tenant Broker?

A tenant broker is a person who helps prospective tenants or buyers locate suitable commercial property and business support services. Tenant brokers can provide you with sound analysis of real estate market conditions, inform you about space availability, and even negotiate lease terms with a landlord.

Before you commit to renting a property, make sure that you have a tenant broker representing your interests. Landlords also hire brokers, called "leasing agents", to fill vacant space in their buildings, but these agents work for the landlord, not for you. They earn a commission from the landlord or building owner each time they get a tenant to sign a lease and occupy space.

Although a building owner also pays a tenant broker's fee, tenant brokers don't work as exclusive leasing agents for one property or one landlord. When you hire a tenant broker, he or she works for you.

A tenant broker should give you objective advice, since their commission isn't directly tied to a particular property. In addition, working with a broker lets a landlord know you're seriously looking at multiple leasing opportunities. This may make a landlord more competitive and willing to negotiate favorable lease terms.

The best way to find a good tenant broker is to ask the right people and conduct your research. Look for a broker who has a history of helping clients find properties and experience negotiating lease terms, along with a proven track record of protecting tenants.

 

Q.  Why should I even consider using a tenant broker?

A.  Sophisticated tenants guarantee accountability by giving one broker the exclusive right to represent them.  Briefly, there are three basic reasons to do this:

 

1.  The exclusive broker can be totally objective in advising the tenant.  On the other hand, since non-exclusive brokers only get paid if the deal is made at one building out of many, their advice cannot be objective.

 

2.  It signals to the landlords that the tenant is professionally represented, and that they will have to compete with others for the tenant's business.  Landlords' attitudes usually change as soon as they are contacted by the tenant's broker.

 

3.  It protects the tenant from legal entanglements that inevitably arise when multiple brokers are involved, and from the annoyance of constant solicitations.

 

Non-exclusive brokers, both legally and practically, are sub-agents of the landlords.  The negotiating leverage, expertise and objectivity that you need in your relocation efforts can only be provided by an exclusive broker, who is accountable solely to you.

 

 

Q.  What is so complicated about negotiating a commercial real estate deal?

A.  The 'deal' is in the details.

Just as in accounting and law, commercial real estate transactions are made up of many seemingly small, but interrelated details.

 

This is especially true of commercial lease transactions, where the ‘effective’ rate a tenant pays is comprised of the ‘contract’ rate less a myriad of offsetting reductions (i.e., ‘concessions’ such as a period of full or partially abated rent, landlord provided tenant improvement allowance, fixturization period, reduced charges for covered parking, moving allowance, and many others.)

 

The failure to recognize and negotiate any of these concessions can, over the life of a typical lease, cost a business thousands of dollars in excess rent.

 

Remember, once your lease terms and conditions have been negotiated and the lease is signed, you must live with whatever is contained within the document.

 

Do not make the mistake of trusting these negotiations to well-meaning, but inexperienced staff members or brokers who primarily make their living representing landlords.

 

 

Q: Do I know how to strategically go about the process of creating a competitive environment so that I might receive the most lucrative financial deal available? After all...Landlords make good deals and bad deals for themselves. How do I get the good deals?

 

A: What Officespaceatlanta.com has discovered over the years has now become fact. Your Landlord will absolutely take you for granted. We recall a lawyer client several years ago who got so mad that his face turned crimson red. He said to us, “Do you realize that I have been in this ***xxx### building for over 20 years and I have paid the landlord millions of dollars in rent, and when I went to renegotiate with my Landlord he wouldn’t even offer me a ### paint job!!! I’m moving out”

                                                   

Needless to say, it is true that Landlords will always see what they can get away with. What is very important to understand is that Landlords make both good and bad deals in their buildings. No deal is ever the same. So how does the tenant get to those “good deals”?  The educated tenant always makes the best deal. They have hired a professional tenant rep, has given themselves enough time prior to the lease expiration, and has placed the Landlord into the marketplace in order for the competitive process to begin. 

 

Do you know a proven and strategic process to renegotiate your existing lease for large financial benefits to your company? Get in touch with us at www.officespaceatlanta.com.  We will put you in touch with our hand selected professional tenant reps who can begin the process in your local market.

 

 

Q.  Will a commission always be paid to a broker after a transaction?  Is there a way to eliminate a commission being paid, because maybe I’ll benefit in some way?

A. When you lease office space, you can't  (and should not try) to avoid this standard operating procedure. 

 

Here's why . . .

You've probably noticed that every office building has a leasing agent.  These agents are brokers hired by the landlords to fill vacant space.  When a lease is signed, the agent is paid a commission for representing the landlord.  There is a brokerage commission in every deal.

 

If the tenant is represented by its own broker, though, the commission is paid to the tenant's broker.  (The landlord's agent receives a small override.)  This odd practice actually works to your benefit, since it allows you, the tenant, to determine whether the broker who is paid the commission represents the landlord or represents you.  You incur no out-of-pocket cost for the services you receive from your tenant broker.

 

This is why all tenants who understand the real estate business are represented by their own brokers.  It costs them nothing for the expertise and negotiating savvy provided by a professional who is accountable solely to them.

 

 

Q.  Do you only recommend options from a few partners that you are close with?

A.  Not at all.  We evaluate all available options for you within your geography of interest and present to you those which meet your criteria.  We are not partial to any particular landlords or vendors.  Having said that, we do stay on top of those who give exemplary service and strive to ensure our clients receive “best in class” treatment.

 

Q: What is the rental rate for your office space in atlanta?

A: All rental rates are controlled by either lenders or owners, but they do take into account the marketplace in your city. If the average vacancy rates for the marketplace are high, the landlords/owners will most likely be more flexible, as compared to times when the vacancy rates are low.  Everything, however, is negotiable.

 

Q: Are the quoted rates for the office space you are considering too high?

A: The primary way to get a good perspective on quoted rates is to have a survey made of the buildings that you have an interest in occupying. This can be done by yourself or someone in your office, but we recommend that it be done by a specialist who spends every day in the market. This person of course, is a commercial “tenant rep” broker. 

 

Q: Am I going to have to pay additional dollars towards the cost of my improvements or can I get the Landlord to pay for them?

 

A: One of the most costly mistakes that a tenant can make is to not focus on the improvement allowance that is provided by the Landlord. Most Landlord’s have what they call a “Work Letter.”  BEWARE!  What this means is they have a typical allowance that they will provide to every tenant that walks in the door. Chances are very good that the allowance that is provided in a work letter is far short of the actual cost of building the space or making improvements to suit your requirements. Never sign a lease until you have taken the process through actual pricing with the contractor who will be building the space. Once you know what the cost is you will know what types of allowances to request.

 

Q: What do I do next after finding out that my improvement allowance is not sufficient to pay for building out my space the way I desire?

 

A.  There are several solutions to this problem. You could consider revaluating your desires and prioritizing which are the most important, in the event that you have to compromise what you would like in the build out. Another other solution  is to begin the process again by either asking the Landord to provide the monetary difference or reconsider your second choice of location.  The knowledge that you are reconsidering will surely get some quick activity from your Landlord, who frequently will soon be contacting you with options to the problem.

 

 

Q. How Much Space Do I Need?            

 

A.  The primary factor in determining how much space you will need to house your business is the number of people that will occupy the space. Using the table below, determine the type of space that best suits the organizational role of the person that you are placing or the function that you are trying to facilitate.

The general rule of thumb is to allow 175 to 250 usable square feet per person depending upon the type and style of the business. This figure can vary based upon special needs such as extra-large conference rooms or storage requirements, but will include normal amenities within a general use office.


The following standards can be used to help estimate the amount of usable space required for your business:

Typical President's office or Chairman of the Board
250 to 400 sq. ft. (4 to 5 windows in length)

Typical Vice-President' s Office
150 to 250 sq. Ft. (3 to 4 windows in length)

Typical Executive' s Office
100 to 150 sq. Ft. (2 widows in length)

Partitioned Open Space
Clerical Supervisor or Manager
80 to 110 sq. Ft.

Open Space
Clerical or Secretary
60 to 110 sq. Ft.

Conference Rooms
15 sq. Ft. per person: theater style
25 to 30 sq. Ft. per person: conference seating

Mail Room
8 to 9 ft. wide with 30" counters on either side.
Length depends upon amount of usage

Reception Area
125 to 200 sq. Ft. Receptionist and 2 - 4 people
200 to 300 sq. Ft. Receptionist and 6 - 8 people

File Room
7 sq. Ft. per file with a 3' to 4' aisle width

Corridors
20% to 30% of the total usable area

 

Q.  What is Usable Area?

A.    This method measures the actual occupiable area of a floor or an office suite and is of prime interest to a tenant in evaluating the space offered by a landlord and in allocating the space required to house personnel and furniture. The amount of Usable Area on a multi-tenant floor can vary over the life of a building as corridors expand and contract and as floors are remodeled. Usable Area can be converted to Rentable Area by the use of a conversion factor. The Usable Area of an office shall be computed by measuring to the finished surface side of the office side of corridor and other permanent walls, to the center of the partitions that separate the office from adjoining Usable Areas, and to the inside finished surface of the dominant portions of the permanent outer building walls. No deduction shall be made for columns and projections necessary to the building.

The Usable Area of a floor shall be equal to the sum of all Usable Areas on that floor.

 

Q.  What is Rentable Area ?

A,     This method measures the tenant's pro-rata portion of the entire office floor, excluding elements of the building that penetrate through the floor to areas below. The Rentable Area of a building is fixed for the life of a building and is not affected by changes in corridor sizes and configuration. This method is therefore recommended for measuring the total income producing area of a building and for use in computing the tenant's pro-rata share of a building for purposes of rent escalation. The Rentable Area of floor area shall be computed by measuring to the inside finished surface of the dominant portions of the permanent outer building walls, excluding any major vertical penetrations of the floor.

No deduction shall be made for columns and projections necessary to the building. The Rentable Area of an office on the floor shall be computed by multiplying the Usable Area of that office by the quotient of the division of the Rentable Area of the floor by the Usable Area of the floor resulting in the R/U Ratio.

 

Q.  What is the Load Factor ?

A.  The Load Factor is the percentage of space on a floor that is not usable, expressed as a percent of Usable Area. It is also known as the Common Area Factor or the Loss Factor.

Conversion Formulas

Rentable Area ÷
Usable Area

-->

R/U Ratio

Load Factor (Load)

-->

R/U Ratio - 1

Usable Area x R/U Ratio

-->

Rentable Area

Rentable Area ÷ R/U Ratio

-->

Usable Area

Usable Area x (1 + Load)

-->

Rentable Area

Definitions

Finished Surface

A wall, ceiling, or floor surface, including glass, as prepared for tenant use, excluding the thickness of any special surfacing materials such as paneling, furring strips and carpet.

Dominant Portion

That portion of the inside finished surface of the permanent outer building wall which is 50% or more of the vertical floor to ceiling dimension measured at the dominant portions. If there is no dominant portion, or if the dominant portion is not vertical, the measurement for area shall be to the inside finished surface of the permanent outer building wall where it intersects the finished floor.

Major Vertical Penetrations

Stairs, elevator shafts, flues, pipe shafts, vertical ducts, and the like, and their enclosing walls, which serve more than one floor of the building, but shall not include stairs, dumbwaiters, lifts, and the like, exclusively serving a tenant occupying offices on more than one floor.

 

 

Q: Should I attempt to renegotiate my lease on my own?

A: At Officespaceatlanta.com, we think that it is probably not a great idea. Lawyers have an unwritten code amongst themselves: “The lawyer that represents himself is a fool!”. It is a similar case in the world of office leasing.  By having a tenant rep represent you, your Landlord will naturally be more open to negotiating, as they are aware that it is the tenant rep’s job to find the most appealing options for you. It changes the dynamics of the negotiating process and puts your Landlord into the competitive posture, which for him is rather uncomfortable, because he is fearful of losing your business..

 

 

Q: What will be my Landlord’s attitude toward me (a tenant) when its time to renew my lease?

A: He will do everything possible to get you to commit to him early so you do not go into the marketplace and once again, force him to compete.

 

 

Q: Should I attempt to contact my Landlord to renegotiate my lease before he contacts me?

A: If your Landlord is proactive, (s)he will probably be in touch with you first. The first thing you should think of before entering discussions with them is to secure appropriate representation- someone who can level the negotiation playing field. There are thousands of dollars at risk!  Remember that your Landlord does this for a living and they are usually  pretty good at what they do.  In most cases, lease negotiation is not your forte, it would be advantageous for you to entrust the commercial real estate leasing negotiations to a professional you trust.

 

Q.  Do you also help renegotiate existing leases?

A.  Yes. Because lease renewal time is also 'decision' time, many business people retain me to help decide if they should remain in their current space or relocate. Many times, landlords offer better deals to new tenants. It becomes my job to learn what other leasing opportunities are available and use this knowledge to negotiate lower rates and other concessions.

 

QMy lease doesn't expire for several months. When should we begin thinking about our space needs?

A.  The more time we have, the more bargaining we possess.  We urge you to contact us immediately for a confidential evaluation, assessment, and counsel.

 

 

Q: When is the best time to attempt to renegotiate my lease with the Landlord?

 

A: When you have a need to expand, downsize, or re-negotiate financial terms for your business, it may be a good time to attempt to renegotiate your lease.  You may currently think you are paying too much rent, have too much space, or have not enough space to adequately grow your operations. 

 

Another thing to consider, typically it is good to begin the process that gives you the maximum amount of time if you have to relocate and build out a new facility. If you wait too long (4-5 months prior to your lease expiration) you run the risk of going past the point of no return. You will loose your negotiating leverage and soon find yourself in a “take it or leave it” position.

 

 

Q: Does it make sense to attempt an early renegotiation with my Landlord if I have two or even three years remaining on my lease term?

 

A: Absolutely. Over time a tenant’s rent will increase. As tenants go further into their lease, the rent rate they are paying very often exceeds the rates being negotiated by others in the marketplace. Landlords know this and keep up with the trends. The smarter Landlords will even try to approach their tenants much earlier in an attempt to prevent them from leaving the building and renegotiate at terms much lower than the rates that the tenant is presently paying. Caution is needed to make sure once again that you hire a professional and trustworthy tenant rep broker to appropriately represent your interests.

 

 

Q: Will my Landlord just cancel my lease if I want to move to another location?

A: As strange as it may seem, some tenants will go out into the market on their own with an existing lease obligation thinking that the Landlord will let them out of their lease obligation. It is highly unlikely that even your best friend or brother-in-law will let you out of a lease obligation. Understand that you will have to deal with this obligation and find a solution prior to spending much time in searching for a new location. A good tenant rep can help you with advice that should clear the way.

 

 

These Questions & Answers have been provided by Buddy Shaw of www.OfficeSpaceAtlanta.com in Atlanta, Georgia. His answers come from representing tenants in the Atlanta office space market since 1975 (over 31 years). The answers are his and his alone and should be taken as one manís opinion.

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