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TREND ALERT: Does High Price Equal High Value?

Consumer Marketing 101: Customers relate the price of an item with the value. Just because a property has a high-ticket price does not mean the value is equally as high. When the market is hot is can be easy to justify paying more for an expensive commercial real estate option because we feel if the price is high, the value must be also. So what’s the catch? The assumed value does not always reflect the ticket price.

A common trap to look out for is for investors and sellers that will put lipstick on a pig. Try as they may, a little paint, carpet and updated finishes do not conceal or fully change the actual quality of the overall structure. Make sure that the added dollar signs actually represent features, upgrades or bonuses that are genuine and provide a basis for such a charge in the first place. Otherwise a Landlord can pull the wool over another Tenant’s eyes with a few flashy details.

 

Before you sign on the dotted line, ensure that all factors of the office space meet your needs and expectations. Here is what to assess:

  • Location: If the market does correct, will this still be a desirable area?
  • Goals: What are your long-term goals? A long-term lease or plan to move soon?
  • Value: Always have an appraiser evaluate the building

 

Lastly, calculate and calculate again. Is right now really the best time to buy? Would it make more sense to lease? No one can answer that except without calculating and including IT, all moving expenses, updating marketing materials and the lengthy list of necessary costs. You may still find relocating and purchasing an office building is the economical decision or renewing your lease where you are now. Having a real estate advisor on your side can provide market insight when evaluation both options.

 

 

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Can Tight Commercial Real Estate Markets Effect Your Business?

Can the tight commercial real estate market we are experiencing in Tampa negatively impact your business?

It can if you are not factoring in additional time to identify the right space to relocate your office. If you are reading this in 2018, you most likely signed your office lease in 2012 or 2013 when the market was still bandaging itself from the hit in 2008. In 2012, there were several options to choose from and Landlords were providing incentives like the chocolate samples are the Godiva store.

And now the tables have turned.

Free candy, let alone free rent has been taken off the table as more Landlord’s leaning back, crossing their arms as they review multiple proposals from Tenants for office suites choosing which company has longevity and profitability as a Tenant. Competition for high demand locations and size suites have turned into a profitable game for Landlords but not so much for Tenants who are competing for office space.

How do you make sure the tight market does not affect your business? Here are three suggestions.

  1. Lengthen the timeline for your search.

Allowing for more time in your search will provide leverage when negotiating, giving flexibility to walk away from a space when the terms are not ideal. If however, you are on a time crunch with your lease deadline lingering, you may be forced to agree to terms that increase your financial risk, liability and impact your business long term.

If you are in need of under 5,000 sq. ft., a 6-month search window or more is ideal. For over 5,000 sq. ft., 6 to 12 months is a preferable timeframe. With dynamic markets, contractors are busier and timelines or permits are extended.

  1. Keep your options open.

Avoid only focusing on one office space when the smarter, safer route to take is pursuing your top two options. Here are three main reasons why only focusing on one office space when identifying the right location to relocate your office can end up in a sticky mess:

  1. If the deal falls through, you are back to square one and have lost all the time put into one potential lease.
  2. You can’t compare another lease option and leverage it to show what a competing Landlord is willing to do.
  3. Having one option increases the chance you will give in to what the Landlord is asking because there is no plan B, and you are operating out of a fear of loss.

3. There is no “perfect space.”

Limited supply means limited possibility. Is it likely that an office space you tour has the exact floor plan you are desire? Most likely, no, it will not be a direct match for what you had envisioned. But preparing yourself with an open mindset to the office layout or space modifications will go a long way to getting you want you wan

 

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Did First Quarter of the Tampa Office Space Market Continue Its Uphill Climb?

 

Just like the thrilling ascent of a roller coaster’s steep, uphill climb, Tampa’s commercial real estate market has been climbing higher and higher since 2012, and the ride is not over yet.

We’ve been on a fast track up the roller coaster as the Tampa office market proved a continued increase in asking rents. Class A vacancy rates reached an all-time low since 2006 in Tampa with approx. 6.9%.

  • Westshore full-service asking rents across all classes on average in Q4 2017 were approx. $27.50/ sf, with class A buildings in the $31.39/sf ranges compared to Q1 2018 of approx. $27.60/sf with class A buildings in the $31.55/sf range.

 

  • Downtown Tampa (CBD) full-service asking rents across all classes average was approx. $26.75/sf, with class A buildings in the $28.70/sf compared to Q1 2018 of approx. $27.00/sf with a record high for CBD class A buildings in the $30.00/sf range.

 

  • St. Petersburg (CBD) full-service asking rents across all classes average was approx. $26.78/sf, with class A buildings in the $28.67/sf ranges compared to Q1 2018 of approx. $26.70/sf with class A buildings in the $28.50/sf range.

Activity is consistent with leasing activity from 2017, however the majority of movement that was in the suburban areas at that time was due to the relocation of companies which spiked an increase in rents in Westshore and CBD.  We all know there will need to be a correction in the market but the question is – when will the roller coaster reach the very top before it drops?

Developers, investors and researchers are predicting it is not likely to be soon based upon continued decreased unemployment down to 4.1% and other economic factors. Do the Q1 market statistics forshadow the Tampa office space market’s future? Research is predicting it will maintain the high rents and/or increase with class A in the $33.00/sf range and above.

 

 

Disclosure: Above analytics were captured from multiple sources and are believed to be dependable. Information may be inaccurate or have errors. Office Space Brokers, LLC and affiliates provide the above without guarantee or representation to its accuracy.

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Your Map To Avoiding Hidden Traps When Renewing Your Office Space Lease

Is your office space lease up for renewal? If so, you most likely have a Renewal Deadline to provide your Landlord if you will be renewing your lease. Should you renew your lease? Or relocate your office? Now that is the question. Before you make your decision, avoid these three traps if you want to reduce your financial risk, maximize your monthly rent and providing the most long term flexibility for your company.

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Three Pros and Three Cons of Sublease Office Space

In a market like Tampa, where office space rent has been steadily increasing all over the Bay including Westshore, Downtown Tampa and Carrollwood, the demand for Sublease space has increased for startups and smaller companies. Before you jump into a Sublease, consider these three pros and cons of a Sublease.

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