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from Twitter https://twitter.com/AustinTenantAdv via Blogger cecilia thaon thanks for following me on Twitter! https://t.co/YcFXSQqJ2Q If you are trying to lease office space in Austin you have probably noticed that many landlords won’t agree to anything less than a 5 year lease. Don’t think that just because a space is vacant that a landlord will do a short term lease. Just because a space is vacant doesn’t mean they are not making money especially in a multi-tenant building that is mostly occupied. Obviously landlords prefer long term tenants because it makes their investment more stable and profitable, however there are other reasons why they won’t do anything shorter than 5 years that I will explain below. They have a lot of interest in the spaceIf the space has a cool “creative” build out and/or is in a great location (e.g downtown Austin) you can bet that there will be a lot of interest in it. Most companies these days are looking for similar space…………cool creative spaces with open layouts, a few offices and a conference room, and break area. If a landlord is getting a lot of activity on a space they are going to give first dibs to the company that is willing to sign a 5 year lease. It doesn’t matter if you submitted your 3 year proposal first. If another company comes in behind you that is willing to do a longer lease expect the landlord to give them preference. If you are only able to commit to a 3 year lease then it’s important that you be negotiating multiple options at the same time, because it’s highly likely that one of those spaces gets leased out from under you to a group willing to sign a longer lease. The space needs a lot of tenant improvementsIf a space just needs carpet and paint the landlord might consider a 3 year lease unless there is a lot of interest in the space as discussed above. However if the space needs a lot of work (e.g. carpet, paint, remove walls, build new walls, hvac, electrical, etc..) then the landlord will need a longer lease. Landlords are in the business of making money when they rent office space. The more a landlord spends on improvement costs the longer lease they need to be able to recoup that initial investment. It would not make sense for them to spend more money on a space than what they are able to receive in rent payments. A longer lease gives them more time to amortize the costs and be profitable on leasing the space. For example, say you were leasing 2,000 sf office space in downtown Austin at $8,000 per month and the landlord offered to give you a $40,000 tenant improvement allowance. Keep in mind that about $3,000 of that is operating expenses (aka nnn). With a 5 year lease the landlord is able to amortize that cost over a longer period of time thus allowing them to be profitable sooner. It’s a Class A Office BuildingThere are some class A office buildings that will do 3 year leases, however most of them are willing to wait for a company that is willing to sign a 5 year lease. These buildings don’t like to have tenants always moving in and out. They prefer to lease to established companies with great credit that have the confidence in their business to sign longer leases. Most companies that lease class A office space also like to have nice finish outs which warrant a longer lease because of the high build-out costs.
via Blogger Why Landlords Will Only Do 5 Year Office Leases in Austin Tx
from Twitter https://twitter.com/AustinTenantAdv via Blogger Joe thanks for following me on Twitter! https://t.co/TGgXC7Zdq0 If you are trying to lease office space in Austin you have probably noticed that many landlords won’t agree to anything less than a 5 year lease. Don’t think that just because a space is vacant that a landlord will do a short term lease. Just because a space is vacant doesn’t mean they are not making money especially in a multi-tenant building that is mostly occupied. Obviously landlords prefer long term tenants because it makes their investment more stable and profitable, however there are other reasons why they won’t do anything shorter than 5 years that I will explain below. They have a lot of interest in the spaceIf the space has a cool “creative” build out and/or is in a great location (e.g downtown Austin) you can bet that there will be a lot of interest in it. Most companies these days are looking for similar space…………cool creative spaces with open layouts, a few offices and a conference room, and break area. If a landlord is getting a lot of activity on a space they are going to give first dibs to the company that is willing to sign a 5 year lease. It doesn’t matter if you submitted your 3 year proposal first. If another company comes in behind you that is willing to do a longer lease expect the landlord to give them preference. If you are only able to commit to a 3 year lease then it’s important that you be negotiating multiple options at the same time, because it’s highly likely that one of those spaces gets leased out from under you to a group willing to sign a longer lease. The space needs a lot of tenant improvementsIf a space just needs carpet and paint the landlord might consider a 3 year lease unless there is a lot of interest in the space as discussed above. However if the space needs a lot of work (e.g. carpet, paint, remove walls, build new walls, hvac, electrical, etc..) then the landlord will need a longer lease. Landlords are in the business of making money when they rent office space. The more a landlord spends on improvement costs the longer lease they need to be able to recoup that initial investment. It would not make sense for them to spend more money on a space than what they are able to receive in rent payments. A longer lease gives them more time to amortize the costs and be profitable on leasing the space. For example, say you were leasing 2,000 sf office space in downtown Austin at $8,000 per month and the landlord offered to give you a $40,000 tenant improvement allowance. Keep in mind that about $3,000 of that is operating expenses (aka nnn). With a 5 year lease the landlord is able to amortize that cost over a longer period of time thus allowing them to be profitable sooner. It’s a Class A Office BuildingThere are some class A office buildings that will do 3 year leases, however most of them are willing to wait for a company that is willing to sign a 5 year lease. These buildings don’t like to have tenants always moving in and out. They prefer to lease to established companies with great credit that have the confidence in their business to sign longer leases. Most companies that lease class A office space also like to have nice finish outs which warrant a longer lease because of the high build-out costs. via Tumblr Why Landlords Will Only Do 5 Year Office Leases in Austin Tx
from Twitter https://twitter.com/AustinTenantAdv via Blogger Josh Daspit thanks for following me on Twitter! https://t.co/Qoncn6tern
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from Twitter https://twitter.com/AustinTenantAdv via Blogger Multimusic14 thanks for following me on Twitter! https://t.co/X7Qo9Db1LB Health care practices have a variety of requirements when leasing medical office space. Whether the office space will provide clinical, diagnostic, laboratory, or other services, healthcare providers’ needs differ drastically from the needs of ordinary office tenants. Though finding an appropriate medical office space can be challenging, qualified medical office real-estate brokers can streamline the process and save you time and money! Here are 11 essential issues to consider when reviewing spaces and negotiating leases for medical office space: 1. Cost: Though the sticker price (in other words, the rent) of an office space is the most obvious aspect of a space’s affordability, consider other factors that will increase real-estate expenditures. For instance, if you’re leasing an ordinary office space for conversion into a medical space, it is important to account for conversion costs, which may be quite high. These costs may be enough to deter you from converting a traditional office space, especially since the conversion costs may not pay off in the long run; conventional office spaces lease for shorter periods of time than medical spaces do, and opportunities for renewal may be limited. 2. Accessibility: Depending on the nature of the practice, the office space must be in a location accessible to patients. Visitors with serious illnesses or physical handicaps must be able to easily make their way to the space, or they may simply decide to seek help elsewhere. Consider whether the space you’re looking at already has enough wheelchair ramps, elevators, electronic doors, and other accessibility amenities. Planning to add a practice’s own accessibility features may be more costly than anticipated, and may not even be very helpful, especially if accessibility aids might be relegated to inconvenient locations in or around the building. 3. ADA Compliance: Because accessibility requirements for medical offices are strict, as per the Americans with Disabilities Act, anyone seeking medical office space should look for a location that already meets as many of the stringent requirements as possible. Because installation of ADA-compliant accessibility amenities may be expensive, as discussed above, it is important for tenants to try to negotiate lease terms that place at least some of the costs of ADA compliance on the landlord. 4. Parking: Usually, it’s a good idea to have a lot more parking space for a medical office than for an ordinary office: experts estimate that a medical office should have five parking spaces per thousand-unit of square footage inside. Also consider proximity; the office should have a convenient drop-off area adjoining a closely located parking lot. 5. Improvements: Traditionally, landlords require that any improvements or changes to the building be made by contractors that they know and trust. Because medical office spaces have unique improvement requirements, you will have to communicate clearly with the property owner about introducing new contractors specialized in building medical facilities. The landlord will retain the right to access the space as demolition and remodeling takes place, in order to check in and verify that the value of the property is not negatively affected by the remodel. 6. Biohazards: Another deterrent to owners of conventional office spaces may be biohazards; the office will probably generate and dispose of biohazardous waste, regardless of the type of medical practice. Furthermore, the office might require installation of machinery that presents radiation risks, such as X-ray machines and and CT scanners. In such cases, special shielding will need to be installed, and landlords may balk at the magnitude of such modifications, especially since shielding modifications are not usually covered in standard office space leases. Therefore, be aware that the lease for a conventional office space will have to be negotiated in detail, which may delay the process and incur legal fees. 7. Use: Matters such as improvements, biohazards, and ADA compliance, discussed above, will almost certainly fall outside the range of standard lease language. To prevent lease violations, avoid boilerplate leases and conceive of a lease adapted to the specific needs of the tenant with a medical practice. 8. After-hours Access: Many conventional office-space leases limit access to standard business hours (8-5). However, medical practices frequently see patients during extended hours, or operate 24 hours a day. Be sure that the lease specifies access terms appropriate to the needs of the medical practice, and also ensure that the lease language specifies exactly how, and to whom, responsibility for utilities costs will be allocated. 9. Landlord Access: Usually, conventional leases allow landlords the right to enter any part of the space at any time to make sure that it is being used properly. However, medical practices must ensure the privacy of their patients, so lease language should specify a protocol by which the landlord may access the leased space without violating patient confidentiality. The landlord should expect access to the space by appointment or during certain hours, but the lease language should be clear and sensitive enough that the needs of both tenant and property owner are fully addressed. 10. Exclusive Use Provisions: Because competition among healthcare providers can be stiff, tenants should negotiate lease terms that prevent the landlord from leasing adjoining or proximal office space to identical but competing medical practices. For instance, if the office space is located on an office strip or in a building with multiple suites, a competing medical practice should not be able to set up shop in the same strip or building. That said, make sure that the lease language is very specific regarding what a competing practice consists of, as the presence of a complementary medical establishment might be beneficial, or even desirable. 11. Find a Qualified Broker: In the search for medical office space, it is best to start out with a lease broker with proven experience negotiating for medical offices or facilities. These brokers will be better suited to negotiating complex lease terms that account for exclusive use provisions, landlord access, after-hours access, biohazards, ADA compliance, and accessibility installations. Qualified brokers will streamline the leasing experience and will help secure a lease that fully benefits your medical practice. The list above is only a few of the considerations when leasing medical office space. It’s important that healthcare providers engage the right team to find the right space and to review and negotiate all the terms and conditions that will allow them to operate their practice. If you need help finding and leasing medical office space don’t hesitate to contact us! via Blogger Top 11 Considerations When Leasing Medical Office Space |
AuthorThe experienced commercial realtors at Austin Tenant Advisors specialize in representing the best interests of buyers and tenants in the Search, Selection, Negotiation, and Occupancy of Office, Retail, Industrial & Warehouse Space for lease, rent, or sale in and around Travis, Williamson, Hays, Bastrop, & Burnet Counties, which are the 5 largest counties in Central Texas. We serve the surrounding cities such as Pflugerville, Round Rock, Georgetown, Leander, Cedar Park, Lakeway, Bee Cave, Sunset Valley, Dripping Springs, Buda, Kyle, San Marcos, Burnet, Marble Falls, and more. Archives
November 2020
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