Reducing Office Space and Overhead Costs

Many business owners lease more office space than they actually use.  Since the Great Recession, businesses have decreased personnel and increased efficiency.  Of the remaining employees, a growing number telecommute to work.  Reducing excess office space will allow your business to cut overhead costs and increase efficiency. 

If you have extra office space in your lease, the first step is to check the lease for a cancellation option. If there is no cancellation option, check with the tenants on either side of your space to see if they need to expand. If so, you might work out a deal you can present to your landlord.  You can also try a blend-and-extend lease whereby you agree to terminate the existing lease and make up a new one for five years with reduced space or reduced price.  Your landlord may value longer term leases for the stability of his mortgage. Consider switching to another space in your current building. Your landlord may have a smaller suite available and look to rent your space at a higher per square foot figure.   

Another option is to list your space for sublease.  You may find a complimentary company that would share business machines and administrative assistance in exchange for renting a block of cubicles and a corner office.  You might be able to put up a wall between half your space and sublease out the other half.  Check your lease to see what restrictions apply to sublease.  You may want to consult with a real estate attorney.  Finding a sublease tenant and negotiating a contract requires time, knowledge, and effort.  A local, experienced, and qualified commercial real estate broker will make the process much smoother. 

Troy Golden is President of Golden Group Real Estate. He received his undergraduate degree from Yale University and his MBA in Real Estate from the Wisconsin School of Business. Troy specializes in commercial office brokerage in Chicagoland. Please contact him at troy@goldengroupcre.com or (630) 805-2463.

4 Advantages to Using a Tenant Representation Broker

1. More data, better analysis, faster results.  A qualified tenant representation broker has access to a complete database of commercial space in your market.  A business that outsources its real estate market research to a tenant rep broker enjoys a more comprehensive analysis while saving time for its employees.
  
2. Expert advice.  A season tenant representation broker provides expert advice backed by market data and years of experience.  This counsel levels the playing field during your negotiations with professional, full time landlords and their brokers.  

3. Real cost savings.  Your tenant representation broker reveals, analyzes, and documents all costs related to your lease, allowing you to execute a lease with peace of mind.  Your broker creates a competitive environment between Landlords to achieve greater buying power for you.  You pay no broker fees, your broker splits a fee with the leasing broker, paid by the landlord.  

4. Peace of mind.  Confidentiality is maintained so that employees do not become alarmed at a possible relocation.  Your broker guides you through a leasing process that gives you the best office space, with the most tenant friendly lease agreement, at the best price possible.

Troy Golden is President of Golden Group Real Estate. He received his undergraduate degree from Yale University and his MBA in Real Estate from the Wisconsin School of Business. Troy specializes in commercial office brokerage in Chicagoland. Please contact him at troy@goldengroupcre.com or (630) 805-2463.

3 Common Mistakes Made by Tenants

1. Relying on a broker with a conflict of interest, who represents both landlords and tenants.

It is best practice for tenants to rely on commercial real estate brokers who primarily represent tenants.  This practice ensures that brokers remain true to their fiduciary duty.  You would not have one attorney representing both parties in a legal matter. When so much is at stake financially and legally, you shouldn't have one broker representing both parties in an office lease transaction.

2. Not developing legitimate alternatives to the first choice in a space search.
The biggest mistake that tenants make is not developing legitimate alternatives to their first choice, whether they are interested in new space or a lease renewal. Brokers often hear, "I don't want to move, and plan to renew my lease for another term." Even if you don't tell your landlord, he will often draw that conclusion from your actions. Once the landlord understands this, a tenant loses his negotiating leverage. Even tenants who have no reason to move must develop alternatives to their current situation. Otherwise they risk spending money needlessly because they have forfeited all leverage in negotiating the terms of their renewal.

3.  Not hiring a broker to help with a lease renewal.
Tenants often say, "We don't want to move and intend to renew our lease. Why would we need a broker?"  Landlords hire professional leasing agents to negotiate the highest returns for the investment in their building. If the agent or landlord can sign a tenant at a higher rate, it improves the landlord's bottom line. The key to a successful renewal negotiation is creating competition between your current landlord and surrounding landlords in the area, while maintaining a controlled and organized process. Tenants need to have an experienced advisor providing the proper market research and negotiating skill that will create leverage for them. Tenant representation brokers can save you significant amounts of time and money on lease renewals.  The right broker will understand that you don't want to damage your relationship with the landlord. He will deal with every landlord in an aggressive, yet fair and professional manner.

Troy Golden is President of Golden Group Real Estate. He received his undergraduate degree from Yale University and his MBA in Real Estate from the Wisconsin School of Business. Troy specializes in commercial office brokerage in Chicagoland. Please contact him at troy@goldengroupcre.com or (630) 805-2463.

Business Relocation Checklist

When moving your business, it is helpful to have a game plan to make the relocation process easy and efficient.  

AT LEAST 4 Months Prior To the Move

Many business owners make the decision to move AT LEAST three or four months prior to the desired move date, on average.  The time required to survey space options, choose a location, and negotiate a lease depends on the size of your business:

office size	lead time
1,000 - 3,000 square feet:	4 to 6 months
3,000 - 10,000 square feet:	6 to 10 months
10,000 - 20,000 square feet:	8 months to one year
above 20,000 square feet:	up to two years in advance

During this lead time, you should accomplish the following:

• Obtain a commercial real estate broker
• Visit potential commercial properties
• Determine the desired new office attributes
• Create a basic timeline for the move
• Let your employees know about the move
• Set the date of the move
• Locate and obtain the new property

2 Months Prior to the Move

Two months before your move, you should take care of the following items: 

• Hire a moving company
• Order new signs for the business exterior
• Order new stationary, letterhead, business cards, etc.
• Contact clients and let them know of the upcoming move
• Set up utilities for the new business location
• Arrange for future cancellation of your current utilities
• Order new furniture
• Start organizing documents and office furniture for the move

1 Month Prior to the Move

Address the following items 1 month before your move:  

• Contact insurance provider for new office space insurance
• Order new office keys
• Assign office space to current employees
• Order new checks
• Update bank information
• Inventory and tag current electronics and furniture
• Obtain packing materials
• Notify USPS of address change
• Pack non-necessity items (those which won’t be needed prior to the move)

1 Week Prior to the Move

Address these final items 1 week before your move:  

• Back up office computers
• Pack remaining office items
• Label packed office items
• Pack up desk items/employee personal items
• Inspect new office
• Remind clients of the move
• Remember not to schedule client appointments until post-move
• Assign staff members moving duties

Day of Your Relocation

Take care of these items on moving day:

• Only have essential employees present
• Post signs in new office space to direct movers
• Direct movers in both locations
• Have food/drinks available for movers/staff members
• Final cleanup of old office

Troy Golden is President of Golden Group Real Estate. He received his undergraduate degree from Yale University and his MBA in Real Estate from the Wisconsin School of Business. Troy specializes in commercial office brokerage in Chicagoland. Please contact him at troy@goldengroupcre.com or (630) 805-2463.