The world has changed tremendously in the last few years because of the Covid-19 pandemic. This applies to both our personal and professional lives. With respect to the latter, many companies have transitioned to remote work, and this trend is here to stay. As a result, employers are now forced to rethink their workspaces. Traditional offices are increasingly not the most cost-efficient and practical option for many companies.  Therefore before you start hunting for the best location for your commercial real estate, you should consider some essential aspects. To get started, look at this guide on “What does the office of the future look like?”.

No. 1 The office of the future will focus on quality rather than affordability

Looking at last year’s commercial real estate trends in Florida, you’ll notice a significant shift in what companies seek. Specifically, more than half of the leased properties were in Class A office buildings, while the demand for Class B and C office spaces has declined. Class A office buildings are usually newer, offer high-quality finishes and amenities, and have a central location. As a result, they come at a higher cost. Business owners are increasingly willing to pay higher rents in order to entice employees back into the office.

No. 2 The office will be a bit smaller

With more and more people working from home, it’s logical for the office of the future to be a bit smaller. After all, why would you lease a vast office space if it will be mostly empty? Thus, you should right-size your office space before looking for a commercial property. First, consider the number of essential employees that need to work on-site. Second, determine the square footage that each employee needs to feel comfortable. Third, factor in how the office of the future should be configured. Once you know the minimum size you require, consider the office amenities you wish to incorporate.

No. 3 The office will be hybrid

The number of employees working on-site and remotely varies depending on your field of activity. Regardless of the number of employees coming into the office, most employers still require a physical office. A physical office allows your employees to collaborate on projects and socialize in person and virtually. Therefore, it’s time to consider a hybrid workspace that accommodates both. Forget about those wide open spaces filled with outdated cubicles and create open, collaborative spaces along with a mix of private offices.

No. 4 The office of the future will have access to more amenities

Generally, if you want your employees to come back into the office, you must make the office more appealing than home.  One way to do this is by providing attractive collaborative spaces while at the same time providing some individual offices for work that requires deep thinking.  You can also encourage collaboration by providing areas for employees to unwind and socialize.

Another way to entice employees back to the office is to lease in amenity rich buildings that offer things like restaurants, dry cleaning and day care.   These are features that are not available when working from home.

No. 5 Offices of the future will focus more on employee health and safety

In response to the COVID-19 pandemic, many landlords have implemented various measures to make office buildings healthier and safer for tenants. Some of these measures include:

• Improving air filtration systems: Landlords are upgrading their HVAC systems to ensure that they filter out airborne contaminants, including viruses and bacteria.
• Increasing the frequency of cleaning: Landlords are cleaning high-touch surfaces, such as doorknobs, elevator buttons, and handrails, more frequently to reduce the risk of transmission.
• Installing touchless features: Landlords are installing touchless features such as automatic doors, faucets, and soap dispensers to reduce the risk of transmission.
• Reconfiguring common areas: Landlords are reconfiguring common areas, such as lobbies and break rooms, to ensure social distancing measures are in place.
• Implementing occupancy limits: Landlords are implementing occupancy limits in elevators, conference rooms, and other shared spaces to reduce the risk of transmission.
• Providing hand sanitizer and PPE: Landlords are providing hand sanitizer and personal protective equipment (PPE) such as masks and gloves to tenants and building staff.
• Offering virtual tours: Landlords are offering virtual tours to potential tenants to reduce the need for in-person visits.

Overall, landlords are taking a range of steps to make office buildings healthier and safer in response to the COVID-19 pandemic

Seek expert help

Now that you know what the office of the future looks like, it’s time to analyze your current workspace carefully. If you own the property, you can completely remodel it. If you are renting the space and are not allowed to modify it, a relocation would be best.

In this case, the first thing you should do is hire a trustworthy commercial real estate broker. An expert with lots of market knowledge and experience can help you find a property that fits your criteria. They can even negotiate a better deal for you.

Once you find the right place, look for commercial movers in FL. You should look for skilled office movers who can pack and relocate your office outside business hours. As a result, your activity won’t be affected at all. Moreover, they’ll ensure all your expensive office equipment is safely transported.

In conclusion

The work environment has changed a lot in a very short time. Nevertheless, as a business owner, you must keep up with all the latest trends. Otherwise, your risk losing your employees and even your business. So, use this guide on “What does the office of the future look like?” to decide what changes you’re willing to make to ensure your company will continue to thrive.

At Mobiliti CRE we focus 100% on representing tenants with relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, flex and industrial Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

More Commercial Real Estate-Related Information

• Tampa Bay Commercial Office Market Snapshot
• How to Maximize Tenant Renewals
• 11 Tips for a Successful Real Estate Tour
• Tips for Renegotiating Rent Due to COVID-19
• Is a Sublease Right For You?
• Secrets to Finding Great Investment Properties
• How to Prepare for an Office Move
• Cost Saving Strategies to Reduce Rental Expenses
• How is my office building growing when there’s been no construction?
• Determining How Much Office Space You Need
• How to Avoid Commercial Real Estate Pitfalls

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Many tenants assume that their lease will be renewed on reasonable terms and leave an insufficient amount of time for the renewal to be negotiated. It often turns out that the landlord’s draft proposal involves substantially higher costs than anticipated. If there is not enough time to determine if a better alternative can be negotiated elsewhere, the tenant is left with no options. That is why many tenants, including large national firms, often end up with a bad deal.

Landlords frequently offer to renew tenant’s terms that are not as good as those offered to new tenants.  The landlord knows that new tenants are in the market shopping around. To attract new tenants, the landlord must be willing to match the competition in terms of rental rate, free rent, utilities, tenant improvements, building systems, communications, security systems, electrical capacity, lobby appearance and other factors.  However, if you are a tenant interested in a renewal, the landlord presumes – and tends to be right – that you are not shopping around. The landlord assumes that you are primarily concerned with avoiding the cost and disruption of a move, and that the landlord can probably keep you in the building without offering you nearly as much as a new tenant is offered.

If you assume the cost and disruption of moving are so high that your only good option is to renew your lease, it will become your only option. You will be a captive market, and you could easily miss substantial benefits that your landlord offers as inducements for new tenants.

Here’s a proven strategy for maximizing the value of any renewal — even if you are 100% committed to staying at your current location.

• Use time to your advantage

You need to start early enough so you have time for all the normal phases of site selection, financial negotiation, and analysis, lease negotiation — plus time to walk away from a bad deal and continue negotiations elsewhere if need be. This means that if you plan to renew at your current location, you should be actively assessing your options at least 12 and preferably 18 months before your target move-in/renewal date.

You could be in for a shock if you let time slip through your fingers. Even a tenant that negotiates renewal terms with a landlord but does not finalize the lease amendment may find that those terms are no longer being offered as the lease expiration approaches.

Related: Cost Saving Strategies to Reduce Rental Expenses

• Understand your options in the marketplace

If you don’t have a good idea of what lease terms other tenants in the market are getting now, then you have no way of determining whether a landlord’s proposed renewal is a good deal or a bad deal. Your landlord’s offer could easily be less generous than what other tenants in your building or your submarket are getting.  In that case it would qualify as a bad deal even though it might be an improvement over your original lease.

Rent and tenant improvement allowances are just the beginning. Equally important are terms buried in the fine print, terms which can undermine what you assumed to be a good deal. For example, the operating expense clause, electricity clause, use clause, sublease clause and all clauses relating to landlord performance standards.

More: What is the Difference Between an Assignment and a Sublease?

• Use your inside knowledge of your current building and/or landlord’s operations to formulate the terms of your renewal

As a long-time resident of the building where you plan to renew, you have a key advantage that can help you secure improved lease terms. You know the physical characteristics of the building and how it has functioned in the past. If you have always been dissatisfied with the way the common area lavatories look, elevator waiting times, how the HVAC system functions, etc., your broker should be specific about these issues in negotiating your lease renewal. Seek specific quantifiable improvements. Calculate a reasonable dollar value for each improvement to be made and stipulate a penalty or consequence if changes agreed upon are not made within an agreed-upon time period. Implement the changes agreed upon with effective business terms in your new lease.

• Let your landlord know you are actively seeking alternative locations.

Preserving good relations with a current landlord is often cited by tenants as a reason for “going it alone” when it comes to negotiating a lease renewal. The unfortunate effect of such a strategy is that it reinforces ownership’s belief that you have no options and don’t take the prospect of lease negotiations seriously. It’s a clear sign that you are prepared to settle for whatever is offered.

Negotiating a lease renewal should be treated like any other business operation — the management team makes a reasoned assessment of all relevant options and selects the best fit. It’s important to let owners know that this is your approach to whatever terms they might offer — or expect you to accept in a lease renewal.  When a landlord understands that you are having a tenant representative objectively evaluate the marketplace, they are likely to become more realistic about what your lease renewal is worth.

More Info: Tips for Renegotiating Rent Due to COVID-19

• Understand what it will cost your landlord if you move out.

A common stumbling block in renewal negotiations is the undeniable fact that no matter how good a deal you will get by moving, you will also incur costs that may be substantial — the cost of the physical move, new telecommunications wiring, perhaps costs of building out the new space that go beyond what ownership will supply, new stationery, perhaps new furniture, etc.

However, the landlord will also incur substantial costs if you leave for more favorable terms elsewhere. For instance, potentially lost revenue, promotional costs, brokerage commissions, infrastructure refurbishment, demolition costs and build-out costs. In every situation, these costs can be quantified with a high degree of accuracy, and should be part of discussions with landlord to maximize the value you get as a renewing tenant.

Related: Design Trends to Avoid When Renovating a Rental

The differential in these costs — what a landlord will spend to attract a new tenant, and what they will spend to retain you — can be substantial, and easily exceed a year’s rent. With an astute tenant representative and a properly structured negotiation — some portion at least, of these savings, can be used to further reduce your costs should you elect to renew at a current location.

• Be prepared to move if you can’t get market-rate terms.

Ultimately, if your analysis of the market indicates that by moving you will incur substantially lower costs over the term of the lease, this is probably the option you should select. Moving for marginal savings – 2% or 3% — might not be warranted, but if projected savings are 10% or more, this is likely to be your better option. No matter how specialized your facility, no matter how convenient its location, no matter what the cost of build-out, if a comprehensive site selection process, financial and lease analysis shows you can get better terms elsewhere, it may be time to move on. Occupancy costs are often the second largest fixed cost a tenant faces; in total, they may consume up to 50% of net revenue. Managing occupancy costs is a critical corporate responsibility. When landlords understand that lease renewals are not a “sure thing”; when tenants regularly subject lease renewals to an objective, market-driven process, the result is likely reduced occupancy costs across the board.

For more information contact my office anytime!

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There are times the landlord’s agent represents both the landlord and the tenant.  This is called dual agency. Although the agent already has sworn his or her loyalty in writing to represent the landlord as his principal with a fiduciary responsibility to act in the best interests of the landlord, the dual agent then pledges to represent the tenant prospect as agent.  When the landlord’s agent acts as a dual agent, there is always a potential conflict of interest. It is never beneficial to a tenant when an agent represents both sides of the transaction.

A commercial real estate tenant is better served by hiring a tenant representative to represent the tenant exclusively. The exclusive tenant representative will perform a site search of all available properties, filter those buildings meeting the tenant requirements, arrange tours of properties the tenant would like to visit, and negotiate letters of intent to lease space on behalf of the tenant. Finally, the tenant representative assists the tenant in negotiating business points for the lease agreement. As exclusive agent for the tenant, tenant reps provide objective, conflict-free advice.

Although landlord agents work to get the best deal they can for the landlord, tenant reps owe their loyalty and fiduciary responsibility to the tenant. The tenant gets a much better chance of a fair deal when the tenant rep is working on his or her behalf.

In the past landlords had an overwhelming advantage in terms of commercial real estate market information, but with the advent of tenant reps, tenants now have a mechanism to fill the knowledge gap. Tenant reps provide a source of current market data to help level the playing field for the tenant.

Rental rates are currently rising as the economy improves and vacancies decrease.  We expect that rates will continue to increase over the next several years as the economy continues to improve.  There are still opportunities to be had and we are encouraging our clients to review their leases now in order to determine if it makes sense to extend the term of their lease in order to lock in a rate moving forward.  Please feel free to contact us at any time for a free lease analysis. Retrieved from “http://www.articlesbase.com/real-estate-articles/no-cost-for-tenant-rep-2263659.html“

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