Neighbors: An Important Factor When Selecting Your Business Location
When choosing a location for your business you need to keep a lot of things in mind.
One of the most important is obviously the location of the office space, but also the neighbors. Just like when buying a house or renting an apartment you want to find a place that is in a good neighborhood that you feel safe in, and that has people who are like minded to you.
To take it a step further when you are looking for an office space you should think about what types of businesses will be around you. For instance, if you are an orthodontist, is there a dentist in the same office complex or down the street that can send you referrals? If you are a specialty cake shop is there a coffee house nearby that you can partner with to display your cakes? Or if you are a high-end clothing retailer is there a dry cleaner in the area that you can refer people to make sure they take care of the clothes they purchase in the proper way?
Not only do you want to identify these potential partnerships or referral sources but you want to “be a good neighbor” to them and build a relationship with them so that they not only know who you are, but they like and trust you enough to refer their clients, friends, and family to you.
If you find an office that is in a strip mall, a mixed office space building, or one of the new and popular shared office space locations make sure you are being a good neighbor at all times. What does that mean? Well it’s pretty simple, it’s the golden rule you probably learned in kindergarten. Treat others the way you wish to be treated. Don’t steal their parking space, don’t be overly loud as a neighbor, don’t leave trash or other smelly items in your workspace/office that could bother others. Be friendly, cordial, and respectful and build a genuine relationship and friendship.
So not only do you want to select a location that has good neighbors but you want to be a good neighbor to them and focus on building relationship because you never know where your next referrals may come from.
As a Commercial Real Estate Tenant Representative, I work with a variety of business each with their own needs for commercial real estate space. The ability to work with an independent retailer is often unique because the checklist of requirements is drastically different than a commercial office building. Finding a space that fits the products being sold, target audience, and potential foot traffic is a fun and rewarding challenge. Outlined below are a few options to consider for independent retailers when considering commercial space.
Mall, Strip Mall, or Standalone Building
Location, location, location. Making sure you pick a store front in the right location is critical to the success of your business, and a lot of it depends on what kind of business you have. If you are a hip clothing store whose demographic is Millennials you might want to select a location in Center City or Manayunk with high foot traffic and visibility to your target demographic. If you are a high-end clothing boutique who caters to a demographic in their 40-60s you might want to consider a standalone building or part of an outdoor town center like Suburban Square or Lancaster Avenue in Wayne.
Renting, Leasing, or Buying
To buy, or not to buy? Another factor you need to take into account is whether you want to rent or buy your retail location. There are pros and cons with each option and it will depend on what kind of capital you have available starting or relocating your business.
Leasing is the most common option among retailers. Leasing is less Capital intensive and usually, requires less property management depending on the lease and the landlord. This allows a retailer one less thing to worry about so they can focus on their business. When it comes to building maintenance, upkeep, landscaping and more it can become another full-time job. If you choose to lease be sure your Tenant Representative explains the specifics of the lease agreement so you understand your liability as an occupant. This can be a huge weight off your shoulders compared to owning and maintaining the building and property.
Tenant Improvements – The Potential of the Space
When it comes to your retail space be sure that you are versed with your needs to create the space you want. The manner in which a Retailer displays its products/merchandise or services is unique. Therefore, you may need to spend some dollars finishing a “vanilla box” to suit your business. Some landlords are positioned to financing Tenant Improvements, other are not. An experienced commercial real estate tenant representative will know the right questions to ask and help to ensure you will get what you need to make the space your own.
For a retail space, the flow of the store and the functionality of the different areas can be critical to its success so make sure you take those factors into account when searching for your location.
As you can see there are many factors that go into deciding which location is best for your retail location. These 3 considerations are the tip of the iceberg for a great start to success.
Looking for a qualified tenant representative to get your commercial real estate search started? I am happy to provide a free consultation to review your needs as it relates to the Greater Philadelphia commercial real estate market. 215.793.0406
A city is defined by it’s skyline.
The image of a city’s skyline goes on everything from t-shirts to coffee cups to paintings. It helps establish the identity of a city and it’s people. But skylines are always changing, especially here in Philadelphia.
I’m sure when you think of the Philly skyline a few major images come to mind, the distinct silhouette of William Penn on the top of City Hall, the massive boxy outline of the Comcast Center, the matching points of One and Two Liberty Place.
Later this year the Comcast Technology Center will open and the skyline will once again change forever. It will be the tallest building in the city at 1,121 feet tall, the other Comcast Center was previously the tallest since 2008.
City Hall was actually the tallest building all the way up until 1987 when Liberty Place was built. And so the Curse of Billy Penn began and no Philadelphia sports team was able to win a championship for decades. The curse only ended in 2008 when a small figurine of William Penn was placed at the top of the new Comcast Center. I wonder if Comcast has any plans to put a new figurine on top of the upcoming Technology Center upon completion.
Skylines just like cities are always changing and I’m interested to see how the Philadelphia skyline develops and grows in the coming decades.
www.phillybydrone.com takes incredible photos of the Philly skyscrapers through the use of a drone. The drone allows them to capture a variety of angles that most people wouldn’t have the chance to see otherwise. Below are a few of my favorite shots he has gotten so far.
This post was created in honor of June being National Skyscraper Month and the inspiring history of the Philadelphia skyline.
Jacob Adelman of the Philadelphia Inquirer recently published an article detailing how the Philadelphia City Council has approved a real estate transfer tax law that will close existing loopholes, and could have a huge impact on future transactions.
I found it very informative and wanted to share with anyone else that was interested in the Commercial Real Estate industry.
Click this link to view the article!
The Cities are Hot, The Suburbs are Not
The world of commercial office space is changing. The questionsis not only how it’s changing but where?
In the 1940’s and 1950’s, returning GI’s left the cities to buy their dream homes in the suburbs. The developers were more than happy to accommodate and thus began the suburban sprawl. Office buildings were built to accommodate companies that wanted offices near their owners, employees, and customers. For over 50 years, this cycle repeated itself throughout the country and suburban office markets boomed.
This changed in the first decade of the new millennium. The millennials, raised on digital social connectivity, wanted social connection in real life and a lifestyle incorporating working, living, and playing, in the same proximity. They moved to cities, both large and small, that could accommodate their lifestyle: New York City, Los Angeles, San Francisco, Chicago, Boston, Denver, Salt Lake City, Nashville, Austin, Portland, and Phoenix. Technology and other industries followed, driven by their need for millennial talent. As a result, the millennial population and businesses grew exponentially in the cities while declining dramatically in the suburbs.
The question is how long will this new paradigm last? It has been predicted that once the millennials reach forty years old they will start families, want houses, and move to the suburbs. Since the millennials are defined as the demographic born between 1980 and 2000, the first 40-year-old millennials won’t reach us until 2020. All we can do is wait; time will tell.
In the Spring 2016 Issue of National Association of Realtors magazine, Commercial Connections, in an Advocacy Article titled “A Look at Several of The Issues Important to your Business” under “Lease Accounting” there is information on the new FASB Standards that were released in February 2016. This is a reference to the Financial Accounting Standards Board, FASB Accounting Standards Update No. 2016-2 February 2016, Leases (Topic 842).
This is the first big change in something like 40 years to the standards for Lease Accounting. It does apply to all leases, not just commercial real estate leases. For companies that use GAAP accounting it goes into effect December 15, 2018. Most private companies have until 2019 for fiscal years beginning December 15, 2019 to transition to the new rules. There is a lot to digest. And I suspect companies that use GAAP accounting are working now to get their arms around this. And they may need either more accountants and/or real estate brokers to assist with gathering and organizing the data and formulating a strategy for office, industrial, and retail leases.
From NAR’s article under Lease Accounting they ask “What does this mean for my business? The new standards could harm businesses of all sizes, especially lessees and lessors of commercial real estate. With more bloated balance sheets, some companies may see their debt to equity ratios increase and find it more difficult to obtain credit, especially those with heavy debt loads or still recovering from the recession. The new standard could also complicate compliance with debt covenants or agreements between the bank and borrower, which usually prohibit companies from borrowing more than they are worth. By capitlalizing new and/or existing leases, some businesses could show more debt than allowed in their agreement with the lender, and therefore be in default of their loan. This could force some firms to put up more capital for existing loans or even have their credit lines revoked. “
“Additionally, the elimination of off-balance-sheet financing could be detrimental to commercial property owners. More frugal lessees will want less space and shorter-term leases without renewal options or contingent rents, which will decrease cash flow for property owners. Short-term rents will likely reduce the borrowing capacity of many commercial real estate lessors, who rely on lessees and the value of the property as collateral in order to obtain financing. Ultimately, property owners would be forced to increase rent rates due to market uncertainty and reduce tenant improvements due to shorter recovery periods. Conversely, this change could encourage some firms to consider buying instead of leasing commercial real estate.” We shall see what kind of weather this causes for CRE.
Let’s look at trends in the office markets in Montgomery County mid year to the Fall 2016.
Vacancy in the overall market is just under 12%. The average gross rent is $24.00 psf per year, BUT quality matters. Looking at vacancy and rental rate trends in Class A Office Space in Montgomery County PA you now see a vacancy in 7.3% and rates average $28.00 psf, please see the graphs below.
Office Montgomery County PA
Vacancy & Rental Rates
Just shy of $24.00
Class A Office Space in Montgomery County PA
Within Montgomery County vacancy and rates vary by location within the county. It is broken down into towns and A, B, C class office space.
Office Market Mid-Year 2016
CLICK TO ENLARGE
Class A, B, C
Collaborative office space was originally conceived by Steve Jobs for his new Pixar headquarters in Emeryville, California. He believed employees who work independently are less creative than those who work together. So he designed Pixar to provide chance encounters, giving employees the opportunity to connect, collaborate, and create.
As more tech companies adopted this approach, they observed and experienced the extensive benefits of collaborative office space:
- Reduced Footprint. Traditional office spaces are based on 250-300 square feet per person. Employees in collaborative space sit at benches and managers use workstations, thus reducing space needs by up to 40 percent.
- Google Space. Google took collaborative space to the next level. Perks such as gourmet food, massages, and fitness facilities are bait to attract and retain top talent. This minimizes the need for and cost of staffing companies.
- Work/Life Balance. Google Space has become so attractive to employees that they don’t want to leave the office. They eat gourmet food and have their dogs at their side, enabling them to work late into the evening.
- Fewer Sick Days. Wellness has become a major component of the new office environment. Healthy foods and exercise areas promote wellness, reducing time away from work.
- Innovation. Collaborative space fosters creativity. Since all companies thrive on innovation, collaborative office space has become a major contributor to their success.
- Brand Promotion. While collaborative space is good for the employees, the design of today’s office space has become a showroom for the company’s brand, which helps to sell the company’s products to potential clients.
The benefits of collaborative office space are too numerous and influential to ignore. That’s why so many of the world’s top companies are retrofitting their offices accordingly. Contact Peggy Gallagher, your ITRA Global Representative to re-invent your office environment!
This article was originally seen in the monthly mailed newsletter.
If your company is looking to make a move one of the biggest things to consider is location, location, location. Where your company sits is huge in not only determining the type of people and clients you attract, but it also helps define your brand and how the world sees you. There are many factors to consider. Do you need to be near the port, near the turnpike, near potential employees, or your customers, near your home, etc.
If you are a fancy tech start up that wants cutting edge programmers, you want to have stylish offices in the heart of Center City. The Work where they Live Strategy. And, where your employees can grab a coffee at Starbucks on their break, get sushi for lunch, and go out for a beer with their friends after work, all within a mile or so of your location. Central Business District of Center City Philadelphia is a hub for public transportation systems for those employees living outside of the CBD. All of these factors go into creating the type of company culture you want, a young professional, intellectually curious group of people that do their best work in an open floor concept office where they have access to their colleagues and maybe even snacks!
Now if you are another type of business, maybe one that requires mostly office space but a small storage, or assembly area with double doors direct to outside, or your customers, or you, and your employees live mainly in the suburbs, Center City would probably not make sense. Your employees are in a different stage of life, they want to be home for dinner with their kids, or able to drop them off at dance and soccer practice after school. Sitting in an hour and a half of traffic on 76 doesn’t make any sense for someone who wants that type of life. The type of building and even the furnishing aren’t as important as a central location near good schools, neighborhoods, and doctor’s offices.
2 sides of a coin, both great options depending on what your company and employee’s needs are.
Is your company growing? Will you soon need to bring on a number of new people? That’s fantastic! But are you prepared for everything that comes with doing a big round of hiring? Below are some practical tips and advice of what to consider when getting ready to expand your company talent.
First and foremost if you are getting ready to do a mass hire it is likely that you will need to look at larger office locations to accommodate your growth. There are many factors that will need to be considered when making such a decision and most of them will depend on the amount of people you plan to bring onboard.
If your new location is not in a metropolitan area where most people commute via public transit you will need to consider parking availability for your new hires. Availability of on-site parking or street parking are features to consider.
Open Floor Plan vs Private offices
What kind of office plan works best for your type of business? What office equipment will you relocate? What equipment and furnishings will you buy new or lease?
Did you know that as of 2010 the Affordable Care Act requires businesses to “provide a place, other than a bathroom, that is shielded from view and free from intrusion… which may be used by an employee to express breast milk.”? Since breastmilk is food a bathroom is not sanitary and should never be used for pumping breastmilk.
Snack Rooms/Eating Areas
Do your employees tend to eat out for lunch or are they health conscious and bring their lunch? If so you’ll need an adequate kitchen or snack area, along with fridges for storing lunches.
All of these are important factors to consider when getting ready to hire a large number of people that will require new office space. However the answers that will best fit your company will be directly influenced by your unique needs. The process will most likely take months to select the best possible building and floor plan for the future of your company but once your staff is settled and thriving all the planning will be worth it.