A couple of weeks ago, we went over some of the factors that contributed to the current situation. If you missed that, click here to read what happened. This time, we’re going to explore some of the risks/problems that have developed as a result of these factors. They can be broken down into three aspects:
To read the entire post, click here.
If you’re running a dental practice in today’s market, you have most likely seen a lot of changes, from classmates selling their practices to competitors being acquired. Perhaps you’ve experienced some change yourself, worked through tough times or received offers to purchase your own practice. Whatever the case, we’re all a little shell shocked by these occurrences, wondering what happened and what we should be doing in preparation for what’s to come.
In our three-part series, we will look at the factors that are affecting our economy, dentistry and your business. We will provide a snapshot of what happened in part I, then in part II, we will examine the associated risks and finally, when you’re in the middle of planning for next year, we’ll get to the really good stuff in part III —the opportunities.
To read the entire post, click here.
In commercial real estate, you don’t often get an opportunity to create, much less lead, a last-minute game-winning drive. This is exactly what makes Tenant Broker Ted Schwartz a true asset to his clients — most recently, Orthopedic Surgeon Dr. Vincent Boswell.
Dr. Boswell, under poor advisement, had selected a new space for his practice and was in the process of reviewing the corresponding lease which was only days away from execution. His attorney, having recognized his lack of enthusiasm and overall dissatisfaction with his current situation, recommended that Dr. Boswell hire another broker to redirect the relocation process.
Given that the client’s current lease was expiring in just a few months, Ted got busy at work. Within two weeks on the assignment, he identified a viable location that met all of Dr. Boswell’s requirements; the main ones: close proximity to the practice’s current patient base and the doctor’s residence. The new deal resulted in a seven-year lease with a healthy tenant improvement and concessions package, and most importantly a reasonable lease guarantee provision.
Deal Highlights:
The goal for most tenants is to minimize the cost of office space (get the best value and obtain the best space that still works the defined budget parameters). To achieve this goal, it helps to understand the drivers of such costs before you can manage them. Your chances for success in this effort will be improved greatly by seeking expert assistance.
If a tenant does not succeed in achieving maximum value, it is most likely related to one or more of the factors (below) not being properly addressed. Here are some key factors that impact the total cost of your office space:
• Selected location
• Negotiations and lease structure
• Square footage occupied and specific layout
Let’s review these items in greater detail.
When addressing the location, the first requirement is to undertake a thorough review of the market and adequately identify all potential locations that may match the key needs of your firm, including but not limited to the following elements:
• adequate employee work space and scalability
• Image, brand and customer experience
• employee and client access and convenience
This should always be done even if you are strongly considering a renewal in your current location.
The comprehensive market search would uncover hidden opportunities including spaces not officially marketed or available and subleases. When you have this type of insight you’re better able to create leverage and create a true competition for your business. While owners may have specific circumstances, all strive to lease space at the maximum current market conditions will bear.
The objective of course, is to negotiate favorable financial terms which should be based on current market conditions. Unlike retail shopping, in commercial real estate must be structured with an effective negotiation strategy. Today, landlords are more flexible with terms and aggressive leasing packages to not only attract tenants but retain the ones they have. However, the proper timing and approach is needed to take full advantage of market conditions and creating leverage in lease negotiations.
The potentially most challenging factor address is the actual layout of the space. Specifically, maintaining cost control over the design and construction process is critical. The efficiency of your office space and the cost associated with its build out will be a major contributor to your occupancy costs. It is understood that many companies are increasingly focusing space utilization with a goal of doing more with less. Securing the proper volume of office space through efficient design, space standards and construction management can yield significant cost savings.
Who’s got your back?
In making the best real estate decision, there are several key professionals that are dedicated helping you identify, negotiate, and design the office space that best serves your financial and operational objectives.
The first is a commercial real estate broker / tenant advisor that has expertise in the product type, market or industry. In creating a truly beneficial layout it’s good to have an architect or space planner to help provide thoughtful insight on how best to use space and still satisfy key requirements. It probably should not go without saying that you should always have legal counsel experienced in real estate to assist with understanding and negotiation of the complexities of the lease agreement.
Engaging a team of experienced professionals who work together with common focus on your best interests will insure the best possible outcome in addressing the office occupancy solution.
President of Atlanta-based Ackerman & Co., Kris Miller sets the strategic direction for the firm’s investment, management and leasing initiatives. Miller joined the firm in 1996, and during his tenure, Ackerman & Co. has experienced significant growth and has solidified its reputation as one of the most prominent real estate firms in the Southeastern United States.
In this Four on Friday, Hartman Simons got a chance to chat with Miller about the state of the Atlanta commercial real estate market and his career in the industry.
Give us a brief overview of the services offered by Ackerman & Co.
Ackerman is a full-service commercial real estate company. We represent tenants seeking space, landlords renting space, and manage owned and third-party space. We also buy, sell and develop commercial real estate properties.
What is your take on how the Atlanta commercial real estate market has recovered from the Great Recession?
The recovery of the Atlanta commercial real estate market from the recession of 2008 has been gradual. Positive absorption of industrial space began in 2011, followed by the positive absorption of office space a year later. In both cases, those markets had endured net negative absorption for a longer period than any time in Atlanta’s history. The recovery now seems to be gaining momentum and spreading from the submarkets where it began to a metro-wide phenomenon.
What is it about commercial real estate that makes it such a satisfying career for you?
Commercial real estate is satisfying because the effort of your labor is tangible: you can touch it, see it, visit it, and explain to friends and colleagues what you do for a living.
If you could give one piece of advice to someone just beginning his or her commercial real estate career, what would it be?
Get experience as a tenant broker. All the value in commercial real estate is created when a broker brings a tenant to a landlord and a lease is signed. The better you understand this process, the more successful you will be in this business.
The Goddard School, one of the most prestigious early childhood education and childcare learning centers in the U.S., was seeking an intown Atlanta location for one of their franchisees, Learning and Beyond. Adding to the challenge of an intown location were the requirements of an 8,000 – 10,000-square-foot space with a 5,000-square-foot playground.
Seasoned tenant rep brokers Ted Schwartz and Shea Meddin got to work quickly, performing an extensive market search that resulted in a few viable options. The winning choice, while perfectly suited to meet the client’s needs, was already leased. However, since the tenant was in default, the Ackerman duo carefully navigated the deal to where Goddard could replace the defaulting tenant and sign a long-term lease.
The one-of-a-kind deal resulted in:
The Atlanta office market absorption is coming back; the City has absorbed some 2 million square feet of vacant space in 2012. While the news is good (2012 has proved the best year for Atlanta commercial real estate since 2006), the positive absorption is a relatively small number given that the Atlanta market comprises 220+ million square feet of office space.
2013 looks cautiously optimistic. If we can settle the ever-changing crises in Washington, our perceived optimsim for the coming year might prevail.