What Percentage of Revenues Can you Expect to Pay for Commercial Rent?

What Percentage of Revenues Can you Expect to Pay for Commercial Rent

One of the most substantial operating expenses for a brick and motor business or any business that requires office space is the cost of renting commercial space.  Before searching foroffice rentals, you must understand what expenses you can expect to incur.

The cost of commercial property isdependent upon numerous factors, including the city, location, and size of the commercial space that you are seeking. In this article, we will briefly discuss the various cost associated with commercial leases and the calculations that you should conduct prior to committing to a commercial lease.

Commercial Property Rental Rates

During your search for commercial property to rent, you will see advertisements, which may include figures such as “$50/SQFT.” This figure means that the rent is fifty dollars per square foot per year. Once you know the square footage of the commercial office space, you can then estimate your annual and monthly rent cost. In general, it is recommended that you allocate a minimum of 100 SQFT per employee. As such, you can calculatethe number of employees you have (or expect to have) to estimate how much office space you need.

However, please note that this is just a starting point ora basic rent calculation, which is the cost before other expenses (i.e., utilities, maintenance fees, etc.) are calculated. Additionally, the building that the office rental is located in will impact the additional costthat you may incur. For example, a building with a doorman or luxurious lobby will increase the cost of the office rental.

In any event, your lease will define the additional costs you’re responsible for, but as explained below, each type of commercial lease agreement is different.

Different types of commercial leases

A gross lease is where the tenant pays a flat or fixed amount of rent, and the Landlord is responsible for expenses incurred in operating the building. As such,the Landlord pays the taxes, insurance, special assessments, etc.

A net lease is where the tenant pays the rent, and some defined percentage of the taxes, insurance, and maintenance fees.

A double net lease is where the tenant pays the rent, taxes, and insurance.

A triple net leaseis where the tenant pays the rent, taxes, insurance, and operating cost. The triple net lease is commonly used in shopping malls. 

A percentage leaseis where the tenant’s rental rate is based in part on the gross sales made by the tenant on the premises. (e.g., a landlord receives $1000 per month and base rent and 5% of the total monthly profit). Percentage leases are commonly used in retail spaces

Step rent commonly referred to as“step-up rent” or a“step-up lease” is a clause in a commercial lease agreement where the rent may increase at specified periods during the tenancy.

For example, a step-up clause may indicate that the rent will increase by $100 per year to account for inflation. The methodology used for calculating step-up provisionsvaries from lease to lease. For example, the additional rent can be calculated as a fixed dollar amount, or it might be a percentage increase tied to a consumer price index, etc.

Your broker can help negotiate the terms of any rent increases or step-up rent provisions.

Usable Square Footage vs. Rentable Square Footage in Commercial leases

To avoid confusion during your search for commercial space, you must remember that there is a difference between the usable and rentable square footage of commercial space.

Usable square footage

Usable Square Footage only includes the square footage that is exclusively for use by you, the tenant. The usable square footage calculation is what you should use to determine whether a potential space will meet the needs of your business. Typically, an office rental’s usable square footage isn’t advertised.

Rentable Square Footage

Rentable square footage includes usable square footage plus a percentage of all the shared office space in the building. This calculation contains things such as shared restrooms, cafeterias, the lobby, and stairways that your employees can use. Additionally, rentable square footage also includes areas that the tenants do not have access to, such as maintenance areas.

More than likely, in a commercial lease, the monthly rent will be calculated based on the rentable square footage, as commercial tenants are expected to help cover the cost of maintaining the entire building.

Loss Factor

Once you are familiar with the useable square footage and the rentable square footage, you can then calculate the “Loss Factor,” which is the percent difference between the usable square footage and the rentable square footage.

(RSF – USF) / RSF = Loss Factor

Essentially, the loss factor equation indicates the total “markup” on your monthly or annual rent. The Industry standards for Loss Factor vary by location and industry, but anything over 40 percent is usually considered excessive.

The Cost of Building Out an Office Space to Meet Your Needs

Unless you’re lucky to find space that already fits your needs, you may need to build out the commercial space you’ve chosen to meet your business needs. For example, you may need to transform a former restaurant into a retail space or vice versa. Sometimes, Landlords may contribute to the cost of renovations by offering rent concessions to give the tenant time to build out space before opening for business.

How to Calculate Your Target Rent Based on a Percentage of Your Gross Income

To ensure that you are keeping your rental cost reasonable, you can calculate your target rent amount as a percentage of your gross income. The standard gross-to-rent rate varies amongst different industries but is typically under 10 percent.

According to Hartman, one of Houston, Dallas, and San Antonio’s premier property management companies, the following are examples of standard gross-to-rent percentages from a variety of industries.

  • 46 percent: Gambling establishments
  • 12 percent: Gas stations
  • 09 percent: Electronics and appliance stores
  • 66 percent: Educational services
  • 82 percent: Finance and insurance companies
  • 19 percent: Arts, entertainment and recreation facilities
  • 21 percent: Food and beverage shops
  • 30 percent: Books, hobby, music, sporting goods stores
  • 37 percent: Health and personal care stores
  • 46 percent Insurance agents and brokers
  • 86 percent: General merchandise stores
  • 52 percent: Health care and social assistance organizations
  • 81 percent: Food and drink establishments
  • 98 percent: Furniture and furnishing stores
  • 7 percent: Hotels, accommodations
  • 66 percent: Clothing and accessory shops
  • 55 percent: Ground transportation companies

How to Calculate the Percentage of Your Sales that will go towards your rental expenses

To calculate what percentage of your gross sales will go towards your rental expenses, use the following equation:

(annual rent/yearly gross income) =Percentage of Your Sales that will go towards your rental expenses

For example, let’s say your rent is $1,000 per month, and your gross annual income is $240,000.

  1. First, calculate the annual rental cost. ($1,000 *12) = $12,000
  2. Next, divide the annual rent by your gross annual income

If your annual rent is $12,000, you would then divide $12,000 by $240,000. ($12,000/$240,000) =.05

Your total would come to 5 percent

This percentage means that for every $1 your company earns, 5 cents go toward the rent.

Knowing this calculation is critical to determine the maximum amount of rent you can comfortably afford for your business. Specifically, this is helpful if you are looking to upgrade your commercial space, but you want to ensure that you still meet your income goals.

Featured Image Credit: By The Photographer / Own work, CC0

Can an office space really be both fun AND productive?

Can an office space really be both fun AND productive?

Decades of rigid workplace policies have conditioned us to believe that there is no way work and play can co-exist. We were taught to believe that fun doesn’t belong in the workplace. You come, get the job done, and leave. But how effective has that approach really been? The reality is that businesses that lack focus on their employees’ well-being tend to experience high employee turnover rates and small profit margins. Or, they simply fail.

There is a misconception that employees are easily replaceable. However, hard-working, loyal employees are a dime a dozen. So it’s in your best interest to take good care of your employees. After all, a productive human resource is the driving force of any successful business! Gallup’s State of the Global Workplace Report indicates that throughout the world only 13% of the employed population is engaged at work. The large remainder is either actively or inactively disengaged; emotionally and mentally disconnected from their work; and highly unlikely to be productive. This can lead to companies losing billions in profitability.

Fun at Work = Happy Employees = Increased Productivity

Employee well-being is at the heart of workplace productivity, but what really influences an employee’s level of satisfaction and engagement?

Work Environment

When selecting an office space for rent, look for one with proper lighting and room temperature, and appropriate facilities. Purchase high performing equipment and develop efficient processes to enable employees to effectively manage their workload. These factors contribute to a conducive work environment to ensure your employees are comfortable. Office rentals in Clifton Park (NY) are specifically designed with a healthy workspace in mind. The office spaces can be customized to suit your specific business needs and give your employees the ability to have fun while they work.

Flexibility at Work

Flexibility here does not refer to mastering your yoga poses, although exercise at the office is not a bad idea when it comes to employee wellbeing. However, flexibility at work refers to:

  • Differentiated spaces – Designate specific spaces for work, relaxation, and collaboration to help boost employees’ mental and emotional health. If space is limited, you can equip one room with gaming equipment, a large TV or monitor, and a pool table. If possible, create a gym area that could also convert into a yoga/Zumba space. Utilize outdoor workspaces so your employees don’t feel trapped indoors all day.
  • Break and/or nap time – Who doesn’t love the occasional break! Employees who work from 8 to 4 or 9 to 5 tend to experience burnout by the afternoon. They tend to be less engaged and less productive. Introduce a 20 to 30-minute break or nap during the day so employees can recharge for the afternoon period.
  • Listening to music while at work – Incorporate music in the office to help your employees stay focused and motivated to be more productive. Your music choices may be soft classical sounds, instrumental pieces or whatever is most suitable.
  • Flexible working hours – Before your employees enter the office, their stress levels may be high. One reason for this is traffic. There’s nothing more stressful than the rush hour commute. Offer your employees the option to work outside of their usual hours or from home some days.
  • Uninhibited employee interaction – Create an environment where your employees feel free to interact with one another. This helps to build camaraderie and improves teamwork.

Workplace Ergonomics

A desk and chair combo molded to cradle the spine and nurture proper posture is fantastic. But innovative seating arrangements like a hammock, or standing desktops take the quality of a person’s day up a few notches. They also help reduce the chances of obesity and other health issues associated with sitting at a desk for long hours.

Dress Code

Some companies enforce a uniform policy for employees. But is anything wrong with employees expressing a little individuality through their attire? Can they dress comfortably and still be productive? Uniforms have their place, but they may not be essential for all environments. Granting your employees a flexible dress code may improve their productivity if they are allowed to be themselves.

Team Building

Taking your team out to a restaurant, encouraging recreational activities, and sharing jokes and stories are some ways to boost staff morale. There’s also no excuse for not having group activities when you live in Clifton Park (NY). With outdoor activities like scavenger hunts and sporting games, there’s always something fun to do to inspire your team beyond the office walls.  

Let’s face it. As a business owner, you can’t just take a commercial space for rent, stick a bunch of people in it, and have a productive team overnight. Statistics show that there is a direct correlation between employee happiness and productivity. For example:

  • Companies that actively focus on employee happiness experience greater profitability than those that don’t by 20%.
  • Employees who feel included are 4.6 times more motivated to perform at their best.
  • Companies that have wellness programs are more likely to be recommended by their employees as a great place to work.

All work and no play makes everyone dull, and maybe even disengaged. Providing employees the balance they need is mutually beneficial to all since happy employees affect your bottom line. Fun and productivity can work hand in hand, and efficiently at that. The work family that plays together, stays together!

Featured image credit: Split the Kipper / flicker

5 Ways to Engage Employees in the Workplace

5 Ways to Engage Employees in the Workplace

by J.T. Taylor, M.A. – President, Team Building USA

Today’s job market is getting very competitive and keeping your best employees and attracting new talent is critical for success. So, what are some cost-effective ways to keep your employees engaged?

Here are five proven engagement strategies for your company:

1. Team Building with a Corporate Responsibility Focus

That’s right Team Building events are a fantastic way to boost morale, increase camaraderie and even give back to you community. Many team building companies offer events such as: Bikes for Kids, Food Bank Charity Challenge or Project Backpack – all of which result in needy children in communities across America – from Santa Ana, CA to Clifton Park, NY, receiving much needed resources as a result of your company investing in its own people.

2. Sincere and Meaningful Praise

In a recent study, employees were asked “What Motivates You the Most in the Workplace?” One would think “show me the money!” would be the top answer, but no, money came in at number three. First was, “making a genuine difference”, and second was “being appreciated for what I do.” Being kind and encouraging is easy to do and it cost virtually nothing and by giving sincere and meaningful praise you are motivating and inspiring your employee.

One manager I know of did something really nice for his assistant. Their business was growing fast and they needed new office space for lease, so after they spent all afternoon looking for offices for rent, they settled on a wonderful commercial space not far from their present location. The next morning the assistant walked into her office and found a bouquet of flowers sitting on her desk with a thoughtful “thank you note”. She walked on cloud nine for the rest of the day. Words and gestures of appreciation have an impact!

3. Solicit Employee’s Ideas

No one wants to be treated as if they are a cog in a machine. All of us want to contribute our talents and abilities to a meaningful cause. What employees do at work is no exception. So, give your people opportunities to improve things around your projects.

Using our previous example from Sincere and Meaningful Praise, before the Manager and his Assistant went looking for office space for rent, they gathered the 25 or employees who would be most effected by the move for a brainstorming session. At the top of the white board the question was posed, “Should We Pursue Offices For Lease, Or Offices To Purchase.” The ensuing discussion delved deep into the cost and benefits of each. Employees were able to see how much more expensive purchasing office space was and what benefits they would be giving up, verses moving to offices for lease. This helped the employees buy-in to the move and engage more fully in the process.

4. Create Advisory Committees

When there is frustration, disagreement or disgruntled employees around an issue, one of the best ways to tackle the problem is to create a committee to come up with solutions to the problem. Select a strong leader, who is a good listener to lead the committee and make sure your most vocal and influential frustrated employee is on the committee. Once the ideas come out of the committee, that negative person will have no occasion to complain about the solution since they were part of creating it. A good leader will ensure everyone’s opinion is listened to and understood. They can incorporate any positive elements they can find into the final solution and liberally share credit for all the contributions. People need to be listened to and taken seriously. This approach will boost morale and enable a much greater degree of buy-in and engagement then simply announcing a decision from the top down.

5. Delegate, Don’t Dump

Too many managers off-load their work onto subordinates just to reduce their workload. This is a giant mistake. Delegation done correctly is a fantastic opportunity to develop leadership in others. Using our office rental example there are a number of ways this could have been done:

  • Manager makes the decision all by him or herself on what commercial space for rent to select. This is a top down, authoritarian move which does nothing to develop any new leadership and creates disengaged employees
  • Manager involves only the key stake-holders in selecting which commercial property for rent the team would move into. Key stake-holders are important players to involve since they sell the decision to the rest of the team. Putting one or two of them in charge of various parts of the move is a great way to develop new leadership.
  • Manager delegates the decision fully to others with carefully thought through parameters and see what solutions the team comes up with. A move that effects everyone, should involve everyone. When a team is considering which office for lease they are going to commit to, that effects everyone. So, take advantage of the impending move and empower rising talent to tackle the challenges involved.

These are five simple ways to engage your employees and they work! You’ve got good people, trust them, develop them, encourage them and reward them. A good leader inspires his or her team to perform their best. They do this by caring about and trusting their people. These are just five ideas on how you engage employees in the workplace and they work!

Featured Image Credit: rawpixel / Pixaby

City vs. Suburban Office Space For Rent

City vs. Suburban Office Space For Rent

When deciding where you want to rent an office space for your company, you essentially have two options to choose from – an urban office in the city, or a more relaxed suburban campus. There are pros and cons to both options, and what works for one company may not work as well for another. Here’s what to keep in mind when deciding between an urban or suburban office space for rent.

Millennials Love Urban Spaces

One of the biggest arguments for keeping your office in the city is simply that millennials love living and working in urban areas. An increasing number of millennials are choosing to abandon their cars in favor of public transit or rideshare services, and it’s easier to do this in a downtown area. They also tend to enjoy living and working in areas with a vibrant community and lots of fun things to do. While there are some suburban locations that offer these things, it’s easier to find them in a big city. And as the millennial generation gets older and are becoming more experienced and valuable employees, choosing an office in an urban area can help you recruit them. It’s also worth noting that many older employees are moving back into the city after their kids move away to college, so urban office rentals will appeal to them as well.

Suburbs Are More Affordable

Although urban spaces are very desirable right now, offices in the suburbs are much more affordable. You’ll pay significantly less per square foot for office spaces in the suburbs when compared to office spaces in urban areas, which are much more expensive. Suburban offices for lease are also typically larger, and in some cases you’ll even get better amenities for your money. For example, in a suburban building, you might have more room for an open office plan or even a large break room for your employees. In the big city, where your space is limited, you might not be able to offer the same quality of space. You should also keep in mind that most big cities charge income taxes on the businesses there, but many suburban towns do not. If you can find an office in an area that does not charge income taxes, it will dramatically increase your company’s overall revenue.

The Parking Conundrum

Another thing to take into consideration when choosing an office space is the parking. If you live in an area where most people take public transit, then this won’t be a problem. However, if most of your employees like to drive to work, then the parking will be just as important as the office space overall. In big cities, many offices don’t have their own parking garages. This requires employees to find street parking and leave their cars in a vulnerable position, or pay for expensive parking garages. Suburban offices, on the other hand, often offer free parking in large, secure lots. In fact, they often have so much parking that your company will have spots for guests. If most of your employees drive, they will appreciate having designated parking spots.

Ultimately, it’s going to depend on your company and what makes the most sense for your needs. You will need to decide what features are most important to you when choosing a commercial property for rent. However, there are some strong benefits to working in suburbs like Clifton Park, NY that many companies don’t consider. If you’re on a budget or just have employees that love suburban living, you might be pleasantly surprised by how well a suburban office space works for your needs.

Featured Image Credit: Clker-Free-Vector-Images  / Pixabay

Growth of Gig Economy a Boon for Clifton Park Office Rentals

Growth of Gig Economy a Boon for Clifton Park Office Rentals

If you have been toying with the idea of becoming a freelancer and entering the gig economy, you are not alone. Clifton Park office rentals, especially ones that cater to freelancers, have been increasing in popularity. In fact, statewide, New York is known to have the highest number of freelancers in the U.S., with most workers offering technical or professional expertise.

Any time a change in labor this significant takes place, one has to wonder if the trend is here to stay. As an individual looks for a small office space for lease Clifton Park NY or across the region, he or she may have a moment of pause before signing the rental agreement. It’s a big step to quit your day job. Do you stay in a situation that requires you to commute to an office you hate where you work 9-to-10 hour days? Or do you continue your search for Clifton Park offices for rent and begin life as a freelancer?

Even though working as a freelancer is not without risk, and some skills are more highly compensated than others, you can rest assured that the gig economy does not seem to be going anywhere. Find that Clifton Park commercial property for rent. Buy fewer suits and more jeans. Have “the talk” with your boss, and go for it.

Here are six reasons why the gig economy has created a boon for Clifton Park office leasing.

1. Freelancers are becoming easier to find.

According to a study called the Future Workforce Report from Upwork, 59% of U.S. companies are using freelance workers and remote workers to complete projects. Upwork and other freelancing websites are the reason for this trend.

Upwork, Freelancer, and Fiverr are platforms that connect business leaders to skilled workers. In most cases, the freelancers can be paid hourly or by the project.

By using these websites, business owners can hire anyone to do anything. You can hire writers, designers, artists, back-up singers, and songwriters. You can also hire webpage designers, computer programmers, lawyers, architects, and project managers. Freelancers even complete personal projects as well. New brides hire freelancers to complete hand-written thank you notes to acknowledge wedding gifts, and individuals hire freelancers to write their life stories.

Businesses large and small benefit from being able to easily find freelancers with specific skills. As you contemplate entering this gig workforce, do your research to determine if working through a freelancing platform would be right for you. You may also consider branching out on your own to find your own clients.

2. Companies are benefitting from hiring freelancers and remote workers.

According to Forbes, 66% of large companies that hire freelancers are doing so to lower labor costs. Hiring an employee is an expensive endeavor. Besides the expenses associated with onboarding and training a new hire, companies also have to pay for workers’ compensation insurance, health insurance, and technology.

Also, businesses located in less popular locations may have trouble finding highly skilled employees within the local workforce. That is why a company located in rural Missouri is more than happy to pay a highly-skilledcybersecurity freelancer who is looking for a Clifton Park office space for rent.

It makes economic sense for a company to hire a freelancer. That’s another reason that the gig economy is here to stay.

3. Freelancing is a great way to work.

As more people discover the benefit of working as a freelancer, there will be more demand for Clifton Park commercial space for rent.

Freelancing allows you to set your own schedule. Parents who are freelancers are more often able to attend their children’s school-day events and then complete work assignments on evenings or weekends.

Commuting during rush hour is no longer necessary, and you can work from home during inclement weather.

Another obvious benefit of working on your own is being able to separate yourself from annoying office politics and gossip.

Whether you are seeking more money or more flexibility, there are plenty of benefits of working as a freelancer. But it is essential to know that freelancers don’t necessarily work less, but they work differently.

4. Freelancers and remote workers need a place to work.

Another reason that freelancers are looking for Clifton Park office space for lease is that they need to find a quiet place to work.

Beginning freelancers and remote workers often dream of working from home. They love the idea of rolling out of bed and immediately beginning their workday. But then, the dog wants to go for a walk. And a child asks for a ride to the pool. And the laundry needs changing. And the dog needs out again.

Working from home is sometimes difficult. Everyone thinks they will be able to do it, but only few can completely focus on work when so many distractions surround them. That’s why after working from home for a few months, many freelancers begin seeking a small office place to rent Clifton Park NY or elsewhere in the vicinity. 

5. Freelancers and remote workers need a place to collaborate and take calls.

Commercial real estate developers pay attention to labor trends and provide adequate workspaces for the changing economy. These developers know that freelancers and remote workers are seeking attractive, quiet workspaces that offer privacy, security, and technology.

Developers also know that freelancers sometimes need a space to collaborate with workers who offer other skill sets. They may also need a quiet, secure place to meet clients.

Freelancers and remote workers are tired of taking meetings in crowded, loud coffee shops. Instead, freelancers are finding office spaces to lease that will provide a professional, neutral space to gather or make calls.

6. Clifton Park is an excellent place for a freelancer to be productive.

Before the rise of the gig economy, workers felt forced to live in large, metropolitan areas to advance their careers. This is not the case anymore. Instead of paying expensive mortgages and always fighting traffic, workers are retreating to quieter communities to work.

Clifton Park has plenty of workspace for freelancers who are ready to leave the traditional office job behind and enter the gig economy workforce.

Featured Image Credit: Alyibel  / Pixabay

Does Your Office Space Need A Nap Desk?

Does Your Office Space Need A Nap Desk?

Nap Desks are Transforming Office Space Work

A regular sleep schedule is absolutely crucial when you’re putting in long hours at the office. Unfortunately, there are always going to be those nights when you just don’t get enough sleep, leaving you feeling groggy and sluggish the next day. A nap could remedy this problem, but there’s nowhere to take a nap at work, particularly in small office rentals.

Enter: the nap desk. At first glance, it looks like a typical desk, however, when you slide away the front panel, you’ll find a twin-sized bed conveniently tucked underneath. Push a side panel back, and you’ll have space for a cozy pillow. Several furniture designers have released nap desk prototypes recently, grabbing the attention of tired office workers around the world.

Recharge during the Day

A nap desk could be the perfect addition to your office space, particularly if you consistently find yourself wishing you could lay down and recharge for a few minutes at work. When you don’t get enough sleep and you feel groggy, it’s inevitable that you won’t be your best at work. You’ll be sluggish, and you may take longer on tasks than you normally would. You won’t be as effective in meetings, and you may even have to repeat tasks multiple times to get the desired results.

However, just a 20 minute nap in the middle of the day could change that entirely. This gives your brain a chance to essentially ‘complete’ the sleep cycles you didn’t get the night before, so you’ll wake up feeling refreshed. When you’re more awake and energized, you’ll be able to get much more done. Not only does this help you feel better at work, but it also benefits your bosses and coworkers.

Save Space in Tight Offices

Adding a nap desk to your office is also an excellent way to save space in an office with a small floor plan. If you don’t have room for a couch or daybed in your space, then a nap desk still gives you a place to relax, without taking up the entire room. This is also a great option for people who have small home offices and want to maximize the space as much as possible. Especially if you live in a big city, it can be difficult to find offices for lease that have a large floor plan. Nap desks are part of a trend towards space efficient furniture, which is designed to be practical for atypical floor plans.

The Benefits of Napping At Work

There are many situations at work where a nap can be incredibly helpful. Maybe you didn’t get enough sleep the night before and want to catch up on rest during your lunch hour. Maybe you are struggling to meet a deadline and need to stay late at the office. In some cases, you will actually get more sleep if you can sleep at work instead of taking the time to go home and come back in the morning. Whatever your situation is, there are many reasons why you can benefit from napping at work.

After you wake up from a nap, you will likely be much more productive, because your brain will be refreshed and recharged for the day. You will also be more accurate, and your memory and creativity will be at their best after your nap. Especially in a job where your performance is absolutely crucial, taking naps when you need them can be the key to success.

Napping is also an excellent way to reduce stress. As stress builds up during the day, you might find yourself feeling physically tense, which can lead to bigger problems like headaches and digestive issues. You may also find that you are focused more on just trying to stay afloat and manage stressors than being totally productive at work. Many of today’s workplaces are very intense and create a culture of stress. Taking a quick nap gives you the opportunity to relax and let go of the stress.

Ideally, you should keep your naps around half an hour in length. In many cases, longer naps can leave you feeling groggy and disoriented for a short period of time afterwards. This essentially counteracts the positive benefits of taking a nap. Long naps can also affect your sleep schedule at night. Everyone is different, so you may need to do some trial and error to figure out the perfect nap length for you. Make sure you set a timer when settling down for your nap, just to make sure you don’t oversleep.

If you are an employer, you may want to consider giving your employees a comfortable place to nap, like a nap desk. Encouraging mindful rests and breaks during the day can actually help your employees be more productive, so it benefits everyone. When you give your employees the option to take care of their health, it also creates a better culture at work, because it shows that you respect your employees. When looking at office space for rent, consider how you can make your employees feel comfortable and productive.

Since nap desks are trending now, many furniture designers are releasing their own versions of this unique new furniture piece. If you feel tired at work or just wish you had a place to relax and recharge on stressful days, you may want to consider adding a nap desk to your office rentals. Not only will you be ahead of the curve, but you might just end up feeling more productive too.

Featured Image Credit: RobinHiggins / Pixabay

Open Office Spaces Can Offer a Positive Work Environment

Open Office Spaces Can Offer a Positive Work Environment

Image Credit: rawpixel / Pixabay

The general consensus has gone back and forth as to whether open office spaces help boost productivity. There is research that suggests that coworkers in open office spaces have poorer relationships and reduced job satisfaction. Some people have a hard time concentrating while trying to work in the same room as all their colleagues. However, there are several distinct advantages to working in an open office space. 

Open Office Spaces Limit Superfluous Chit-Chat

One might conclude that an open office space would foster a lot of social conversations that are not actually relevant to the task at hand. However, research indicates that the open setting and lack of secluded space to converse actually discourages unnecessary conversations. People tend to socialize more in private settings, where they believe they will not be overheard. Studies indicate that people tend to be less social in general in open office spaces. People in open office spaces have been shown to have more frequent interactions with their coworkers, but actually spend less time overall interacting.

Open Office Spaces Inspire Constructive Conversations

When people in a workspace share the same goals and are respectful of each other’s noise preferences, open office spaces work great for fostering productive interactions without lowering workers’ job satisfaction. Workers in open office spaces have more opportunities to collaborate with their coworkers.

                Workers in open office spaces are more likely to learn from their coworkers. Training new employees is often easier in an open office space. They are not left to flounder in their own offices and can quickly and easily ask any number of people for help without greatly interrupting anyone’s workflow. Also, its easier to learn important information from overheard conversations in a shared space. Anyone can ask for help and receive it in short order. Employees can put up whiteboards, flow charts, drawings, and mind maps, and all contribute to these tools when they have ideas. Open office spaces allow for constant group brainstorming and problem-solving.

How Open Office Plans Can Be Made to Work

The employees’ mindset is the most important element of making an open office space work for a company. They have to be available to help others without getting too distracted with everyone else’s tasks. They also have to be able to see periodic interruptions as opportunities to help and learn, instead of as problems.

            It is also important to establish rules as a team. These should be discussed as a team in order to gain full cooperation. For example, there should be agreed upon way to ask one’s colleagues not to interrupt a task. Appropriate noise levels and activities should be discussed to minimize distractions. Protocols for brainstorming productively can be established, so everyone knows how they will be expected to contribute.

If possible, open office spaces should establish some more private spaces as well. For example, it is often helpful to have a room available for quiet work time. In addition, there should be meeting rooms for projects that require extensive discussion between specific team members, since tasks that require in-depth discussion do poorly in open work environments.

            Another factor that contributes to successful open workspaces is if everyone is working on connected tasks. If everyone is working on projects that are mostly independent of each other, they can become distractions to one another. However, if the tasks are connected, employees are able to work on most of the tasks collectively. In this circumstance, workers must be able to quickly exchange information and become used to lots of short interaction throughout the day instead of fewer longer discussions.

            Lastly, it is important to realize that open workspaces do not work for every type of work. For example, scientists doing research found that open workspaces were too distracting. Any workplace that specializes in mostly individual tasks will probably not be benefited by an open floor plan. When considering an open workspace, match the nature of the tasks with the space.

The Effect of Tech/Creative Tenants on Office Leasing

The Effect of Tech/Creative Tenants on Office Leasing

The companies that are among the most prominent tech and creative companies in the world have had an impact on society so massive that it has never been seen until now. They have made a point of making sure that no one today can do without their products, and have improved the general quality of life for many people. Despite the incredible effect they’ve had on the world, at least three of today’s ten largest companies by market capitalization are relatively new. Amazon incorporated in 1994, and it’s actually the oldest of the three. Currently its the sixth largest company on the list. Next came Google in 1998, and it is number two in market capitalization. Facebook, the fifth on the list, came next in 2004. These businesses and others mark a new era of companies, and they have been at the forefront of drivers of rapid leasing activity. They are not only expanding in their primary markets, but also taking advantage of lower real-estate costs and spreading out to secondary markets.

Another indication of how fast things are changing among tech companies is the fact that most of the 162 private companies worth $1 billion or more reached that billion mark in the last three years or less. The oldest one made the list in 2009. These companies are listed on the CB Insights Unicorn List.

Firms that have shown up in the last twenty years have been leasing more office space as they’ve grown. They have had a profound impact on the leasing of office space. These creative and tech companies are defining trends in leasing, despite the prevalence of more traditional companies in the leasing market in the past, and they are beginning to affect other sectors. These companies are even taking Boston and New York by storm, despite the fact that historically the majority of their office spaces were leased by more traditional industries, even as other cities hosted more and more creative and tech companies.

As a result, the commercial real estate market is experiencing a boom. In 2015 the absorption figure reached the highest it had been in a decade, 86.7 million feet of absorption. On the other side, vacancy declined 70 basis points, falling to 12.5 percent from 2004 to 2005. The vacancy rate is the lowest it’s been since 2008. The majority of the change is due to Creative/ Tech companies. Salesforce.com leased 300,000 more square feet in New York. The building is to be renamed Salesforce Tower New York. Amazon went from 8.3 million square feet in the Silicon Valley and San Jose to another 11 million square feet in Seattle. Facebook also added another 275,000 square feet. According to experts, almost all of the net absorption of commercial leasing space has been due to the new Tech and Creative companies.

Creative companies and tech companies, companies mostly staffed by and strongly related to millennials, are taking the world by storm. They’ve had an exceptionally significant impact on the amount of office space leased, and it looks like they will continue to in the future.

Featured Image Credit: rawpixel / Pixabay

Should you Rent or Buy Commercial Property for Your Small Business?

Should you Rent or Buy Commercial Property for Your Small Business?

Nowadays, many small businesses start their journey to success from home.

Maybe they start in a spare bedroom or use a room behind the garage. That’s all fine when, there are, let’s say, 2 or 3 people working together, but what happens when your business grows? What happens when you need to start taking on more staff to fulfill orders or to provide the necessary sales or administrative support? What about your files, records and new office equipment, where’s that going to fit in to your current space?

Moving involves several key decisions

Well then, it’s really time to start thinking about moving to a purpose-built office or other type of commercial space. But the big question is: Do I rent or buy commercial property to facilitate my business expansion and future growth plans?

Once you have made the decision (probably in conjunction with your partners or staff) to make a move, there are a myriad of factors which you will need to review to help you with your decision. And these factors may differ slightly if you are making the first move out of home, or have moved premises once (or twice) already.

Questions which have to be asked

Questions which have to be asked

The list of questions to be covered is not endless and each small business may have their own reason whether to rent or buy commercial property. In any event, have a think about these questions which we at Greater Alliance Federal Credit Union suggest you ask yourself before you make a decision:

What future growth does your Business Plan call for?

Future business growth is always difficult to predict. If you have a 2-3 year plan to hire “X” more people, maybe add a showroom to your premises, for example, you probably want to lease. This will allow you more flexibility in case you grow faster than anticipated.

Lease terms can be as short as three years, with possibly an option in the lease to further extend if all covenants are complied with. Generally, leases are much easier to adjust.

On the other hand, buying a commercial property and paying a mortgage suggests more of a sense of permanence. If the mortgage offers fixed monthly payments, this may be better for planning long-term. In addition, you can enjoy capital growth if property values increase in the location you buy in—but, as we all know, this is not always the case as extraneous factors can affect value and cause a decline.

But, be careful. The last thing you want to do is buy commercial property, only to find it’s too small in, say, 3 years’ time and have to try to sell on the property.

Do I have enough savings/cash for the required deposits?

If you are leasing or buying you will need money for a deposit. If you plan to rent property you will need money for the security and utility deposits under the terms of your lease—although, of course, you get this back at the end of the lease term.

If you buy you will need rather more money for the down-payment as part of the purchase agreement. Even if you can afford the down-payment, do you want to tie this money up in buying property or would it be better to, at this stage, put it into the growth of your business?

Of course, it’s wise to discuss this issue with your accountantor financial adviser who will help analyse the move from a purely financial perspective.

They can:

  • consider any tax implications or benefits from interest, depreciation and non-mortgage expenses;
  • analyse the impact of rental or mortgage repayments on your annual operating budget;
  • make recommendations about your cash flow and working capital needs

How important is your location?

If you are reliant upon clients finding you at a particular location or depend, to some extent, on retail sales, then the availability of the right property will help determine your decision.

Some prime locations are only ever for rent as Landlords are keen to hold on to their investments. Plus, the cost to buy in a prime spot may be just too high for a fledging business.

On the other hand, if you primarily go to visit your customers or do a lot of work on-line then a second-tier location may work for you. In such case, renting makes sense as there is more chance of getting additional space in the same building as and when you need it.

Have I calculated occupancy add-on costs?

Don’t forget that there will be various direct and indirect costs to be added to your cost of occupancy, whether you rent or buy commercial property.

If you rent, many of the expenses might be built into the lease rent but you need to be sure about your liabilities for common area maintenance fees, parking costs and the like. Then there are utilities and operating insurances to be paid.

Renting also brings fewer headaches leaving you to focus on your business growth and not worry about running the building.

If you decide to acquire a building, this comes with this the added costs of building repairs and maintenance, building insurance (as compared to operational insurance). Plus,the costs of security systems or guards, common area cleaning and, probably building or property taxes levied by the City or district.

So, what’s it to be?

The final decision whether to rent or buy rent or buy commercial property for your small business needs a great deal of thought and future planning. One other key factor for other small business owners is how long they expect to stay in a property before their anticipated growth requires them to move again?
Featured Image Credit: Prawny/ Pixabay
In Post Image Credit:  geralt /Pixabay

How to Negotiate a Great Lease for Your Startup

How to Negotiate a Great Lease for Your Startup

In the process of starting and growing a new business, there are a lot of hurdles than entrepreneurs have to face. One of those hurdles is the cost – starting a business is expensive, and leasing office space is one of the biggest expenses a young company will incur. Therefore, it’s extremely important to know how to negotiate for the best possible lease. This can save you money that can then be redistributed into other parts of your company. Every lease is different, but the following tips will help you learn what to look for and how to make sure you get a lease that meets the needs of you and your company.
            Of course, you’ll need to note that your ability to negotiate a lease depends on how much leverage you have, so scout around. Find out if there are other companies that are interested in the space you’re looking at, and how long it’s been vacant. This will let you know how much leeway you may or may not have when it comes to negotiating the exact terms of the lease. So, some other things to think about:

The Lease’s Length

The Lease’s Length

           Finding a new tenant can take a lot of work, so landlords are often willing to work with you on lease terms if, in return, you’re willing to commit to a longer lease. On the other hand, if your needs change, you may end up stuck in a lease that’s too small, too big, or too expensive. If you can, sometimes a compromise is the best option – look for a shorter-term lease with the option to renew, and you may be able to get the best of both worlds.

Rent Escalations

            A steady rate for rent is relatively uncommon over a long period of time. This makes sense – housing markets get more expensive, and there’s always inflation, so landlords have to raise the rent over time. Sometimes, this takes the form of annual, percentage-based increases connected to the Consumer Price Index (CPI). This is often negotiable, to some extent. You can try to make a deal for a rent increase that doesn’t kick in until after the first two years (at least), or try to negotiate for a cap on how much the rent can increase per year. You can also negotiate ahead of time for a fixed increase, rather than one based on the CPI.

Improvements

            Many leases state that the tenant may not make unapproved alterations or improvements to the property. But, the space may need some improvements in order to fit your needs, so ask for a clause that will allow you to 1) make those improvements with the landlord’s consent, and 2) provides that the landlord cannot unreasonably withhold or delay that consent. Since improvements raise the value of the property, your landlord may be willing to give you a tenant improvement allowance, a pre-negotiated amount of money that the landlord will provide you to make the improvements you want.

Repairs and Replacements

            Many leases contain a clause that states that at the end of the lease, the premises must be in the same condition that they were in at the beginning of the lease. Try to negotiate for a clause that will exclude ordinary wear and tear, fire damage and damage that wasn’t the tenant’s fault, and (of course) any landlord-approved alterations or improvements.

Assignment and Subletting

            As a growing company, you need to prepare for possible mergers, changes to share ownership, and other types of reorganization. Make sure you negotiate for an Assignment and Subletting clause that is flexible enough to accommodate these possible changes.

Shop Around

            Be aware that the terms “usable square footage” and “rentable square footage” are not the same, and they are not interchangeable. Remember that a space’s useable square footage is always less than the rentable square footage. This is because “usable square footage” excludes common areas – for example, hallways, elevators, bathrooms, and lobbies – so don’t compare two spaces that have different units listed; make sure you’re comparing apples with other apples, and nothing else.

Think About Subleasing

            Sometimes companies grow and take up more space over time. Other times, they shrink, and some older companies end up with a large space that outsizes their needs. You may be able to find a good deal subleasing office space from a company like this. Subleasing also comes with a handful of potential advantages over a direct lease: The space is already in use, so any needed improvements are probably already in place, t may be cheaper and easier to get than your own dedicated facility, and you can probably get a shorter lease term (so you won’t be trapped if it doesn’t work out).

Of course, in addition to the other company, you’ll also be beholden to the terms of the original lease with the landlord, so don’t skim that document.

Letter of Intent

            It may be helpful to begin your negotiations for your space by presenting the landlord with a letter of intent. This is a good way to start out the negotiations with your essential terms already on the table: lease rate, term, renewal options, improvement options, et cetera. After laying the groundwork with the letter of intent, you can negotiate for a lease that both parties will find satisfactory.

Featured Image Credit: geralt / Pixabay

In Post Image Credit: geralt / Pixabay