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June 9, 2023
Even if your staff is only coming to the office a few times a week or once a month, they will notice how it makes them feel. Does it feel worth it to come to the office, or do they see it as a hassle? Despite the large number of people working from home, the office environment is still an important ingredient of your brand and company culture. This is something you can control so don't let it become the negative element that drives employees away. The good news? Right now is a fantastic time to update your office and reinforce your brand. Let your employees know they picked the right firm to work for and stay with by investing in the amenities they desire.! Plus, the space redesign may not cost your company a penny! We have seen a division in quality when it comes to office space leasing in the last year. Commercial offices are rated roughly by Class A, B, and C, plus the creme de la creme of office space-the Trophy Office Tower (the newest and best buildings.) While rental rates are down across the board for office space in most major cities, the percentage that rental rates are down in Trophy and Class A is minimal compared to Class B office space, which has dropped dramatically. Class C office space is also down a fair amount. While these classes differ in occupancy, office landlords are generally being aggressive on leases. We are seeing landlords offer some enticing concessions that include space redesign and improvements in order to keep space occupied in their buildings. This means there has never been a better time to upgrade your office space than now. If your lease is expiring in 2023 that's opportunity knocking at your door! Even if your lease doesn't expire for a couple of years, there is still the potential to renegotiate that lease right now in a weaker market. The battle for top talent is going to continue for many years, so don't let your dated office space keep you out of the running for quality employees. You want an office space that gives you an edge in the competitive job market. Your employees will appreciate it and just might slow down some of that staff turnover that keeps you up at night. If your company is interested in exploring the options you have in your current space, contact an S5 Advisory tenant advisor, they would love to have a discussion with you. Email us at info@s5cre.com. |
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June 9, 2023
1. Office Sector: The office sector in 2023 is experiencing a shift driven by evolving work patterns and changing preferences. Key trends include: a. Hybrid Work Model: The pandemic accelerated the adoption of remote work and flexible office arrangements. In 2023, the hybrid work model continues to gain traction, with companies adopting a mix of remote and in-person work. This trend is reshaping office space requirements, with a growing emphasis on collaboration areas and flexible workspaces. b. Coworking Spaces: The demand for coworking spaces remains strong as freelancers, startups, and small businesses seek flexible and cost-effective office solutions. However, the industry has become more competitive, leading to increased consolidation and diversification of offerings among coworking providers. c. Wellness and Sustainability: Tenants are increasingly prioritizing wellness and sustainability features in office buildings. Developers are incorporating elements such as green spaces, natural lighting, and air filtration systems to enhance employee well-being and attract tenants. d. Suburban Office Demand: Suburban office markets are witnessing increased demand as companies seek to establish satellite offices closer to where employees reside. This trend is driven by the desire for shorter commutes and a better work-life balance. 2. Industrial Sector: The industrial sector continues to be robust in 2023, driven by the growth of e-commerce and logistics. Key trends include: a. E-commerce Expansion: The rapid growth of e-commerce continues to fuel demand for warehouse and distribution space. Retailers are investing heavily in logistics infrastructure to meet consumer expectations for faster delivery times. b. Last-Mile Delivery: The rise of last-mile delivery services has led to increased demand for smaller, strategically located distribution centers near urban areas. These facilities enable faster delivery and reduce transportation costs. c. Technology Integration: Industrial properties are becoming more technologically advanced, with automation, robotics, and artificial intelligence (AI) playing a significant role in enhancing operational efficiency. Developers are incorporating smart technologies to optimize warehouse layouts and streamline logistics processes. d. Adaptive Reuse: With the growth of e-commerce, some retail properties are being repurposed for industrial use. These adaptive reuse projects provide an opportunity to convert underutilized retail spaces into warehouses or fulfillment centers. 3. Retail Sector: The retail sector is undergoing a transformation in 2023, as retailers adapt to changing consumer preferences and the continued growth of e-commerce. Key trends include: a. Omnichannel Strategies: Retailers are increasingly adopting omnichannel strategies to provide a seamless shopping experience across online and physical channels. They are leveraging technologies like augmented reality (AR) and virtual reality (VR) to enhance customer engagement and bridge the gap between online and offline shopping. b. Experiential Retail: To attract customers and drive foot traffic, retailers are focusing on creating immersive and experiential in-store environments. This includes incorporating interactive displays, pop-up shops, and entertainment elements to provide unique shopping experiences. c. Repurposing of Mall Spaces: Traditional shopping malls are being repurposed to adapt to changing consumer demands. Developers are transforming vacant retail spaces into mixed-use developments that combine retail, entertainment, residential, and office components. d. Local and Community-focused Retail: The shift towards supporting local businesses and community-centric retail experiences has gained momentum. If your company is interested in exploring the options you have in your current space or exploring other options, contact an S5 Advisory tenant advisor, they would love to have a discussion with you. Email us at info@s5cre.com. |
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November 15, 2022
When it comes to commercial real estate leases, purchases and sales, businesses should retain a dedicated corporate real estate advisor to ensure their interests are protected and their objectives are achieved. Why? We have five good reasons: 1. Subject matter expertise of commercial real estate, trends, construction, documentation, and negotiation tactics 2. Market expertise across product types, often in multiple markets on leases and sales 3. Financial benefits obtained in the form of lower rent, lower purchase price, higher concessions, or avoidance of potential costs 4. Resources and networks providing your company with current availabilities in the market, including pocket and other unpublished listings, along with actual rental rates and concessions available 5. Risk mitigation Some businesses are finding out the hard way that searching for available properties and negotiating leases or purchases on their own takes a very long time. The internet is full of outdated listings with old rental rates and spaces listed for lease that are no longer available. Lots of time is wasted pursuing dead ends, so outsourcing to a real estate expert makes the best financial sense. Working with a dedicated corporate real estate advisor streamlines the space finding process so businesses don't waste time on phantom spaces. A good real estate transaction is the gift that keeps on giving while a poor real estate transaction can bring about years of ongoing costs and headaches. If your company has one or more leases expiring soon and you would like to explore adding flexible clauses into your lease negotiation, please contact us via email at info@s5cre.com. |
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April 29, 2022
1. Start the process early: Don't be the tenant that has to double move because the space isn't finished. Shortages in construction labor and materials are increasing the length of time to obtain construction pricing and complete construction projects. Higher costs are also making lease negotiations more difficult with landlords. It's going to take longer to finish the lease process, so start sooner! 2. Lease Expires in 2023: Most office tenants wait to start negotiating with their landlord until there are only 3-4 months of term left on the lease. Why not negotiate the lease renewal early while the office market is soft? If you aren't sure what your space needs are, then it makes sense to wait. But if you know what your space needs are for the foreseeable future, take advantage of the uncertainty in the office market. 3. Sublease & Assignment Rights: Landlords like to maintain control of their property, which is fair. But sometimes they go too far and retain the right to arbitrarily reject a sublease or assignment. This can adversely impact a tenant's plans when it has new space needs. Adding some flexibility in subleasing the space is worth the effort in a new lease or lease renewal negotiation when adding staff, downsizing, or buying/selling another business. 4. Renewal Options. In soft markets, tenants tend to overlook renewal options because they assume they will be able to continue to lease their current space as long as they are willing to do so. Unfortunately, this is flawed thinking. Space markets can, and do, recover quickly and change the demand for space―and that includes your space. Even if overall space demand doesn't increase, that doesn't mean there isn't another tenant in need of your space for some reason. Don't be the tenant that loses their space to their neighbor or to that really big tenant that moves into your mostly empty building. Renewal options are customarily only provided upon request and are often not granted to smaller tenants, but it's worth asking for. S5 team members will review the above items with tenants when consulting them on new leases and renewals ― but the above items just scratch the surface. There are 30+ important lease terms to review in order to improve negotiation outcomes. If your company has a lease expiring in the next few years and wants to achieve the best possible outcomes, please contact us to discuss in further detail. |
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April 29, 2022
What are the most challenging issues for tenants today concerning the supply chain and impacts to leases? - Material and Equipment Availability: What you need might not be available, so tenants need to be prepared to consider alternatives. Even when alternatives are available, they will likely take longer to get as compared to two years ago. - Rising Costs: From drywall to paint to electrical outlets, the cost of materials has been going up―along with labor costs. These rising costs create problems for tenants that require work in the space being leased before it can be occupied. It's also a problem for tenants that simply want to upgrade or reconfigure their current space. - Lead Times: If your company is planning to move, the timeline to complete construction is longer than it was last year. Many tenants are missing their move-in dates because the spaces aren't complete, primarily due to materials not being available. For example, if door frames and steel studs take three months to arrive on the job site, your construction project timeline just got three months longer. When will these supply chain issues just go away? Unfortunately, we are hearing from industry experts that supply chain issues will continue to worsen in 2022. That will push prices higher and make lead times for materials and equipment even longer than they are today. Some supply chain recovery is anticipated sometime in 2023, but most industry experts are cautious with their predictions at this stage. So, what can a tenant do to mitigate supply chain issues and lessen the negative impacts? - First, retain an exclusive tenant advisor to help you. We have seen firsthand how supply chain factors are negatively impacting tenants and already have solutions to recommend that will help you overcome them. - Start your leasing or construction processes very early. We suggest you add a minimum of three months of time for smaller projects and six months up to a year for larger projects. - If your company has specialized equipment needs, it would be wise to pre-order those items, so they don't negatively impact your overall relocation timeframes. - Your real estate advisor will help you consider space alternatives, lease structuring options, and will use proven negotiation tactics to lessen the supply chain impacts to your company. If you have a 5,000 square foot office space to relocate, start the process 10-12 months before the lease expires instead of just 6-9 months. The main reason is that construction is going to take longer, so you need to sign a lease three months earlier than you would have normally done in the past. If you have a 100,000 square foot manufacturing facility to relocate, start that process 6 to 9 months earlier than you would have in the past. If you are considering new construction alternatives, start even earlier as there are very long lead times on steel. In the end, real estate transactions have many sequential steps to complete before a tenant can occupy a space. Delays in materials and labor will likely cause a day for day delay in the project's completion, so it is critical to start early and retain an exclusive tenant advisor to guide you through the process to mitigate supply chain challenges. If your company is considering relocation, please contact us to discuss your particular needs. |
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April 29, 2022
For office building tenants, here are the top five things to look for in your expense reconciliation this spring: 1. Utility Costs: The expenses for electricity should be lower because of the lower number of hours that office spaces were occupied. When computers and lights aren't on, the amount of electricity used is less. 2. Trash Removal: If there isn't as much trash, the cost should be lower as compared to previous years, provided that the property manager modified the service accordingly. 3. Janitorial Services: When the spaces aren't occupied, the amount of cleaning should logically be less. However, some building owners and managers added cleaning services to combat Covid-19. Each building will be different. 4. Gross Up Clause: This is a lease clause and not an official expense. However, the landlord's use of a gross up clause does increase a tenant's expenses. The gross up clause allows the landlord to artificially increase occupancy sensitive expenses like utility costs, trash removal, and janitorial services, when the total building occupancy is less than a certain percentage occupancy. The percentage noted in your lease might say 100%, 95%, 90%, 85% so you will need to check your lease to find out this number. Landlords use the word "occupancy" or "occupied" interchangeably with "leased." So, if your building is 100% leased, then there should not be any gross up of expenses, even if very few people were actually using the building during the pandemic. It is important to compare your 2021 actual expenses versus 2019 total actual expenses since 2019 was the last year not impacted by the pandemic. That will provide a basis of comparison for your building when it was actively being used versus any drop in usage due to pandemic concerns. It makes sense to review your annual expense and tax reconciliation even if you are receiving a credit. Just because the total amount of building expenses was less than what you were charged does not mean that everything you were charged followed the terms in your lease. Operating expenses and tax costs can be a significant part of your total occupancy cost, so it is worth reviewing your reconciliation each year. If you contact your property manager each year to check on expenses, they will be less likely to charge expenses that are not allowed in your lease. If your company needs any assistance with reconciling operating expenses, please contact us to discuss your particular needs. |
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May 2, 2020
As Shelter in Place mandates are lifted across the country, a number of steps should be considered before employees return to the office. While longer term plans are being explored for office design in a post COVID-19 work environment, there are some short-term solutions for improving safety for workers that can be implemented now. Stagger Work Shifts Phase in Employees' Return to the Workplace Implement Personal Space Partitions or Screens for Desks Spread out Desks, Convert Underutilized Spaces or Conference Rooms into Dedicated Desk Space. Plan to Increase the Square Footage Allotted per person from ~150 - ~180 sf to ~320 - ~350 sf per person Eliminate Shared Desks Encourage Employees to Bring Their Own Food or Have Lunch Delivered in Individually Packaged Meals Install Touchless hand Sanitizer and Soap Dispensers Remove Non-essential Doors, or Leave Doors in the Open Position Implement Daily Cleaning and Sanitation Procedures Plan for Managing Crowding in Common Areas by Limiting Seating and Using Visual Cues Check out our Q1 Newsletter below for more details on planning your re-entry strategy, creating healthier offices, and adapting existing office layouts to allow for social distancing. DOWNLOADABLE PDF FILE |
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August 27, 2019
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May 4, 2019
However, recent research has found that this open office layout has actually led to a decrease in team collaboration. This biggest issue that has been found with an all open layout is that it does not take into consideration that individual employees thrive in very different types of environments. While some may enjoy presenting their ideas to a big group and maximize productivity in a noisier environment, others may prefer a more private or quiet setting. To address these concerns, companies are implementing some important changes to the open office floor plan. One shift we have seen is the creation of designated zones or spaces within the office. For example, you may create a collaborative break-out area where employees can meet with one another to talk and go over ideas, while also implementing a designated quiet zone elsewhere in the office. In addition to these zones, it's important to have private space available to employees such as conference rooms, huddle spaces or phone booths. We are seeing more and more clients explore modular meeting space options or building out additional meeting rooms within their existing space. With high construction costs, it is best to negotiate these expenses associated with build-out upfront when signing a lease. Overall, the most important thing to do when deciding on your office floor plan is to recognize the different needs amongst your employees. Creating a space that caters to everyone will help maximize productivity and boost employee satisfaction. If you are looking for advice about your office layout, or have any questions, please reach out to our S5 Advisory Team. Besides helping you find your next office space; we are always happy to assist with any of your existing space needs |
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April 6, 2013
Patent Number: 8,407,084 DOWNLOADABLE PDF FILE |
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February 25, 2013
Indian Americans are expanding their resumes beyond business - to being political and civic leaders - because they understand "that becoming a U.S. citizen is a huge responsibility - and they embrace it," he added. Indian Americans have founded 13 percent of startups in Silicon Valley and nearly 7 percent of them nationwide, according to research by Stanford and UC Berkeley, Forbes reported. "We can be tough entrepreneurs," Chugh said, "maybe because we know what it's like to come from a place where so many live on the edge." He emigrated from New Delhi to the valley as a teenager in 1981 and now is managing director of S5 Advisory, a corporate real estate firm. DOWNLOADABLE PDF FILE |
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