Commercial real estate is tricky. As desirable as some office buildings may appear, landlords are often left with customized office space when the tenant outgrows the location or relocates – which makes filling those spaces a challenge. Through the efforts of good tenant representation, a company can lease such space and redesign it to meet their needs – but that may take a while. In the meantime, the owner may or may not have started collecting full lease price for the property. Excitingly, something new is happening – many older leased areas that have been vacated are being leased to start up businesses and smaller companies. This allows such businesses to get into these buildings quickly and inexpensively and is pleasing to both tenants and owners!
Empty Space Is Wasted Space
Every landlord wants a fully-occupied building, since they lose money when office space sits empty. At the same time, there are many small companies who cannot afford a long lease or don’t need thousands of square feet. By implementing some creative redesign ideas and more flexible leasing terms, some owners are turning to commercial tenant representation to work with start-ups and small companies to fill buildings.
Office Suite Redesigning
Building owners in some cities have discovered that by catering to start-up companies and smaller businesses in a way not done before, both parties can benefit. Owners can lease office space that is hard to fill and gain tenants that have the potential of the future leasing of bigger spaces as that start-up company grows.
Simple redesigns converting larger facilities into numerous open office suites are attracting the attention of companies that may never have looked at larger buildings. The ability to lease smaller spaces ranging from 1,500 feet to a several thousand square feet is revolutionizing the start-up real estate market as a result.
Such an arrangement provides a tenant with the best of both worlds – space in a prestigious commercial office tower at a size that caters to their needs and at a price they can afford. The only drawback to this is the divided spaces are leased “as is,” without the option for additional redesign unless the tenant wants to pay for the work. The whole idea behind ready-made suites is to avoid delay and extra cost, allowing tenants to move in quickly.
Using tenant representation helps a company request a few small items by working with the building owner while the suites are being designed. This may include some things such as paint colors and other minor cosmetic choices. However, in most cases, a company must be willing to accept the suite the way it has been refinished – a small price to pay for a foot in the door in a downtown high rise.
Everyone Benefits
Tenant reps look on this as a win-win situation for both tenant and landlord. Owners have space leased rather than sitting empty and tenants get a great downtown location, designed in an efficient and affordable manner. It also benefits the corporate real estate market as a whole. Spaces that sit empty drive lease rates down, affecting tenants and owners. Filling these towers even at reduced rates allows good office space to be occupied – and fewer vacancies as a result. Over time, fewer vacancies create greater demand, all of which can help the commercial real estate market and bring rates back up. For now, smart start-up companies with experienced tenant representation can take advantage of these excellent leasing circumstances.
Before any small company or start-up venture moves from a home location to an office building, they should contact a local commercial real estate firm. Motivated brokers, providing good tenant representation can often find great unleased office space in some surprisingly upswing buildings. Then the only direction is up!
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