WHAT IS SPACE PLANNING?

What is Space Planning?

Space planning is the analysis and documentation of a business’s current and/or proposed facility. The purpose may include any of the following:

Improve work flow
Determine if a new space or building will accommodate a business’s current and future needs
Improve communications between employees and/or departments
Satisfy emergency exiting and Americans with Disabilities Act requirements
Creation of employee lounge spaces
Adding work spaces
Implementation of the latest workplace technologies
Creation of teaming spaces

Completed space plans are used in all aspects of implementing the reconfiguration or relocation of a business. Trades that require accurate space plans include contractors, flooring vendors, painters, electricians, computer and phone cabling vendors, HVAC contractors, IT professionals, lighting contractors, furniture vendors, movers, furniture installers and cabinet makers.

office space Plan

Space planning services offered by landlords aren’t always in the best interest of tenants. The space planning firm is being paid by the landlord and typically is looking out for the best interest of the landlord and not the tenant. Tenant square footage requirements can be exaggerated and can result in tens of thousands of dollars in extra lease costs each year. Considering the radical changes in how work is taking place, with the implementation of touchdown and hoteling work spaces, the amount of square footage required by a company in today’s work environment can be greatly reduced through proper space planning.

Written by the designers at officespaceplanners.com, providing space planning throughout the USA since 1988.

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INFO ON BERGEN COUNTY

http://www.co.bergen.nj.us/

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How to Minimize Your Security Deposit

How to Minimize Your Security Deposit

Written by Bert Rosenblatt & Andrew Stein

We’re asked all the time: what is a “normal security deposit”? Unfortunately, the truth is… it depends. Let’s start with the basics: the security deposit is a reflection of and hedge against the landlord’s perceived financial risk. Landlords generally ask themselves two questions in evaluating security deposits:

How much money am I spending to get this tenant into my building (the big-ticket items here are construction dollars and free rent)
How much faith do I have in the financial soundness of the entity signing the lease?

If you’re General Electric, you’ll likely pay no security, whereas a start up no one’s ever heard of is likely to pay a lot. Practically speaking, the range of security deposits runs the gamut from 0 to 24 months.

Here are a few things that may help you keep your security deposit on the lower end of this scale.
Find Built Space

Building “plain vanilla” office space in Manhattan in today’s environment can easily cost $100/s.f. Landlords shelling out this kind of money want their pound of flesh in the form of security. One of the easiest ways to reduce your security deposit is to find space that is already built out, as opposed to raw space where the landlord will “build to suit” or give you a cash contribution toward the build-out. With built space, the money that went into building becomes a sunk cost and will be viewed differently, and far more favorably when it comes to determining the security deposit.
Take Less Free Rent

Most office space tenants negotiate a period of time at the start of the lease where they occupy the space without paying rent. This can range from a month or two all the way to a year or more. From a landlord’s perspective, free rent is a necessary evil dictated by the market. It is also looked at as cash out of their pocket that they want to securitize or in other words, it’s one of the things that raises your security deposit.

From a Tenant’s perspective there are a two strategies worth considering:

Half rent instead of free rent: let’s say instead of 6 months of free rent you agree to 12 months of half rent. This helps the Landlord because they have immediate cash flow, which should equate to less risk and a lower security deposit.
Take less free rent: every deal has a lot of moving parts. Evaluating less free rent involves simple math – what is it worth to you and to the Landlord to have less free rent in exchange for less security or perhaps a lower base rent?

Negotiate a “Burn-Down”

If you’re a solid citizen and pay your rent on time, eventually, you should have established enough credibility that your Landlord feels comfortable holding less security. We call this “burning-down” the security deposit. Here’s how it works: you have to negotiate this up front and it must be part of the lease. Typically, the idea is that after a period of a couple of years of consistent and timely rent payments, the landlord will give back a month (or more) of security.

For example, let’s say you’re signing a 15-year lease with an initial security deposit of 9 months. You might agree that every three years the Landlord will give a back one month of security, provided you’re not in default and are making timely payments. The key concepts here are a) there are no hard and fast rules – negotiate what makes sense for your business; and b) make it part of the lease document.

The beauty of commercial real estate is that everything after your name and landlord’s name is a negotiation. The more you understand the rules of the game, the better you’re going to be able to navigate these issues.

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Why It Can Be a Financial Mistake to Negotiate with a Landlord Directly

Why It Can Be a Financial Mistake to Negotiate with a Landlord Directly

Richard Neuman

Contributed by Richard Neuman of Relocation Management Solutions, Inc.

Negotiating

When commercial tenants negotiate directly with landlords, they are often treated like captive markets. Without representation, tenants don’t know what they don’t know (for example, the ability to add early termination rights), and that necessarily results in unrepresented tenants leaving important terms, rights, and dollars on the table.

With tenant representation, it costs tenants nothing extra – only providing savings (often extensive), and the result is a financial document much more balanced in the tenant’s favor – plus the likelihood of securing a much better facility for the tenant’s needs than they can find for themselves, based on our comprehensive awareness of market options. Landlords know when the tenant is armed with extensive market knowledge, they cannot withhold any achievable concessions. Landlords also know the brokers may be negotiating with multiple landlords simultaneously.

Tenant Reps know the vacancy in buildings, but more importantly, the blocks of vacancy that are emerging in specific buildings soon, and what specific concessions certain landlords have granted recently. This knowledge is power for the tenant that they would not have or benefit from working independently.

So armed with this great information, why do tenants still insist on negotiating directly? Well, often what they are typically concerned about is the commission.

That issue, when addressed directly and transparently and explained in the context of the value of the brokers specific and relevant knowledge of his market, the competing Landlords current situation financial and otherwise (i.e., ownership structure, investment horizon) the knowledge of lease terms and the economic value of renewals, expansions, termination rights, market timed terms etc, should become much less of an impediment.

Keep this in mind. Tenant representation is what a tenant rep does. It is their business and one would assume that the tenant rep has the knowledge, experience and business savvy to negotiate a deal that is in the best interests of the client.

Here are some thoughts:

1. STRONGER NEGOTIATION POSTURE WITH LANDLORD

By hiring an experienced real estate broker to renew your lease, you signal to the landlord that you are keenly aware of competing office buildings and are prepared to relocate, which in turn will force the landlord to compete more fiercely for your firm’s continued tenancy. The more time spent investigating other space, the better the renewal transaction becomes.

2. BROKER’S EXPERIENCE IN SIMILAR TRANSACTIONS

A good real estate broker in today’s market is active day-to-day spending his time negotiating renewal transactions in a similar office market for his clients many of whom, may have the same office space requirements. Because of this experience, certain creative solutions and deal structures can be brought to your firm’s attention that would otherwise remain unknown. Those strategies used in renewing a lease are often times different from those strategies used in searching for new locations.

3. USING THE BROKER TO NEGOTIATE

By using a tenant rep, the tenant will not be required to directly interface with the landlord, who may be taken back by the aggressiveness needed for a successful negotiation. The broker may act as the “bad guy” while the tenant remains a “good guy” at all times, thus allowing for a more favorable long term relationship with the Landlord.

Start with the premise that the landlord (and/or the landlord’s broker) is only looking out for his/her own interest in achieving the best terms for the landlord. The tenant rep broker-without any conflicts of interest creates market competition for the tenant in a renewal. Taking a lease to market benchmarks other alternatives that should demonstrate the merits of a renewal vs. a move.

Sure they’ll save the tenant time, but more important they are skilled and experienced negotiators who clearly earn their fee in achieving the lowest costs and best lease terms.

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