Coronavirus Small Business Loan Program: What To Know

Coronavirus Small Business Loan Program business handshake over the table

 

What is the Paycheck Protection Program (PPP)?

As of April 3rd, Congress passed legislation that allocates $350 billion in loans to small businesses as part of the Coronavirus Small Business Loan Program which covers Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Known as the Paycheck Protection Program (PPP), the initiative provides 100% federally guaranteed loans to small businesses through the Small Business Administration (SBA).

The PPP is meant to support small businesses through the economic hardship placed on them during the COVID-19 pandemic. Its primary purpose is for small businesses to maintain payments to employees, as well as cover other essential business expenses such as rent, mortgage interest, and utilities.

Many questions have arisen around the newly formed program and are addressed below.

Who is Eligible?    

The SBA PPP website says the following are eligible if affected by the coronavirus/COVID-19:

  1. Any small business with less than 500 employees (including sole proprietorships, independent contractors, and self-employed persons)
  2. Private non-profit organizations
  3. 501 (c)(19) veterans organizations
  4. Certain businesses in the hospitality or food industry with more than one location could be eligible if their individual locations employ less than 500 workers.

Where do I Apply?

Not every bank and the traditional lender is going to be authorized to issue these loans. The SBA has an approved list of lenders and has set up guidelines for other institutions that may be interested in taking part.

A complete list can be found on the SBA page found here.

Due to the sheer volume of applications being submitted, many banks and lenders are only allowing applicants that have an existing business account with them currently to participate, but this is a case by case situation.

Concerns have been raised that businesses with no prior history of borrowing will have a harder time receiving what may be a necessary loan for them.

Lawmakers have made it clear the current guidelines are still malleable, however until any changes are made, the funds are only available as long as the $350 billion lasts.

When Can I Expect the Loan?

This depends on your lender. The loan is meant to be immediate relief to business owners. It was originally promoted as taking only a single day to receive funds once approved.

However, many lenders are being clear before you apply that it isn’t certain how quickly they can get the money to the businesses. This is due to the sheer volume of requests and new guidelines that many lenders are working through.

Loan forgiveness?

The SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

In order for the full loan to be forgiven, at least Three quarters of the amount must be used for payroll. Forgiveness will be reduced if salaries are decreased or the number of full-time employees is decreased.

If employees have already been laid off, they must be rehired by June 30th in order to qualify for total loan forgiveness.

All loan payments (for expenses made outside of the loan forgiveness parameters) are deferred for the next six months. The loan has a maturity of 2 years and an interest rate of 1%.

How Much Money Can Small Businesses Receive?

They can get up to 2.5 times their total monthly payroll (with a maximum of $10 million). The payroll amount is derived from expenses before the pandemic.

There are also a couple of stipulations when calculating this amount. The amount is based on employees paid $100k or less. If an employee is paid more than $100k, they are only counted towards this loan amount up to $100k.

     Example: Employee 1 makes $175,000
                            Employee 2 makes $88,000
                            Total amount to claim for payroll is $188,000

 
All guidelines can be found in the SBA’s Interim Final Rule here.

Q and A

Q. I have a small business that requires I rent office space, but I do not have an existing relationship with a lender as I have not had to borrow money before now. Do I qualify for the PPP?

A. As long as you meet the SBA’s requirements, you do qualify. Your next step is going to be to find a local lender and connect with them. Many are in the beginning phases, and while some are only working with existing customers, many others are simply taking basic info to connect on a first-come, first-serve basis.

Q. I have a qualifying small business in Clifton Park, NY. Where can I find a local lender approved for the PPP?

A. On this SBA page, you can enter your zip code and it will pull up lenders in your area authorized for PPP loans.

Q. I signed up on my bank’s website to apply and haven’t heard anything back, what should I do now?

A. Many lenders have made it clear that they are currently taking basic information and are managing a large number of requests on a first-come, first-serve basis. Your lender should be keeping you updated with periodic notifications, but there is no guarantee of when they will get to your application. Many are ensuring their customers that they are working continuously to manage the workload.

Q. What other assistance is available to my business in addition to the PPP?

A. The SBA has two other programs listed on their site in response to the pandemic. The first is disaster assistance, which is available to qualifying small businesses in all U.S. states, Washington D.C., and U.S. territories. The second is Enhanced Debt Relief, a program to help small businesses overcome the challenges created by the pandemic.

Q. Can I fill out the application directly on the SBA’s website?

A. No, you must go through an approved lender. However, they do have an example application you can download. It is currently only two pages long and much less information is needed than a traditional loan.

Q. Do independent contractors count as employees for purposes of PPP loan forgiveness?

A. No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan forgiveness.

Q. Can I use my PPP loan to purchase commercial real estate to hire new workers?

A. The loan is designed to maintain current workers and bills. Only qualified expenses will be entitled to loan forgiveness.

Featured Image Credit: ccfb / Pixabay

7 Hidden Costs of Running a Small Business

7 Hidden Costs of Running a Small Business

There are so many great things about running your own business. You get to be your own boss, and you can focus on products and services that you are truly passionate about. However, there are many hidden costs that come with running your own small business. Before you start your own company, it is very important to understand the financial challenges that come with being a business owner, so you can prepare accordingly. You likely already know that you’ll need to hire employees, get an office space for rent, and advertise your company. However, there are also plenty of smaller costs of running a business that you may not have considered. Here are seven hidden costs of running a small business that you’ll need to work into your budget.

Business Permits

No matter where you live, you’ll need to get the appropriate permits to run your business. Laws differ between cities and states, but generally you’ll need to pay for a permit to do business in your area. Depending on what industry your business is in, you may also need to pay for a professional license. These documents need to be renewed regularly, often every year or every few years. You’ll need to add these licensing fees into your yearly budget to ensure you don’t get blindsided by additional costs later on.

Insurance     

It is very important for your business to carry insurance. Not only is it required by law in most places, but it will protect you legally and financially in the event of an accident. You’ll need to pay for liability coverage to cover your customers and your employees, but it’s also worthwhile to invest in additional coverage for negligence and property loss. A good independent insurance agent can help you find an insurance policy that makes the most sense for your company, depending on where you are, what industry you’re in, and what kind of customers you attract. Make sure to budget for insurance payments each month to make sure you’re covered. Keep in mind that many insurance providers offer discounts for consistent customers. Don’t be afraid to negotiate with your insurance provider and ask them how you can save money.

Employee Benefits

You’ve probably already considered the cost of paying your employees’ salaries, but many people forget that they need to offer benefits as well. It’s important to offer your employees perks like insurance and paid time off, in addition to a fair salary. When employees are treated well, they are much more likely to stay with your company, which reduces turnover costs. You will also need to factor in the costs of training both new and existing employees. Investing in good training tools ensures that your employees stay productive as technology advances. You should also factor in the costs of hiring independent contractors as needed. Sometimes the best way to get something done is by using a specialist, which is where independent contractors can be very helpful. However, they can be expensive, which is why it’s so important to budget for this ahead of time.

Equipment and Maintenance

Every small business requires plenty of equipment to get started. Just furnishing your office rentals can get expensive quickly, as you’ll need furniture, computers, and printers, plus you’ll need to maintain a set of basic office supplies, including paper, pens, folders, and more. Of course, you’ll also need to purchase any equipment that’s specific to your industry. The cost of industry specific equipment can add up quickly, which is why it’s so important to factor this into your budget from the beginning. You’ll also need to add in the costs of maintaining your equipment, particularly if repairs need to be done by a specialist. A broken piece of equipment can quickly slow your company’s productivity to a halt, which is why it’s so important to include maintenance in your monthly budget.

Delayed Payments

One of the most aggravating things about running a small business is dealing with late payments. Maybe a customer’s card declines or their check bounces, or one of your largest clients simply forgets to pay their invoice. While it may not seem like a big deal to your customers, it can affect your ability to pay the bills. When possible, it’s important to put money away to cover potential losses in the future. You should also make sure you set clear terms with clients when setting up a contract, and charge late fees for missed payments. This can help you avoid cash flow problems in the future.

Shrinkage

If your business focuses on selling physical goods, you’ll want to make sure you account for shrinkage when planning your budget. Shrinkage is a loss of inventory before it can be sold, and while you can take steps to minimize your shrinkage, it’s hard to prevent entirely. The best ways to prevent shrinkage are to keep very careful track of your supplier orders, and to make sure you’re doing regular inventory checks. Having a reliable system in place for tracking your orders will minimize your chances of experiencing inventory loss.

Loan Payments

It’s normal for business owners to take out a loan to get their company off the ground. However, your loan payments may end up eating away at more of your budget than you had initially bargained for. Loan payments can come with high interest rates, particularly if you don’t have good credit. If you miss a payment at any point, you can end up with late fees that hurt your budget even more. When taking out an initial loan, be sure to consider the long-term costs and how they might affect you going forward.

These hidden costs can make running a small business challenging, which is why it’s so important to include them in your business plan. Although running a small business can be expensive, it can also be very rewarding. Over time, you’ll learn how to budget for your business effectively to avoid cash flow issues and surprise bills.

Featured Image Credit: qimono  / Pixabay

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 mortar business or any business that requires office space is the cost of renting commercial space.  Before searching for office rentals, you must understand what expenses you can expect to incur.

The cost of commercial property is dependent 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 calculate the 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 cost that 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 lease is where the tenant pays the rent, taxes, insurance, and operating cost. The triple net lease is commonly used in shopping malls. 

A percentage lease is 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 provisions varies 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

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 a lower cost of commercial property 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

History of Clifton Park, NY

history-of-clifton-park-ny

Nathan Garnsey House, Clifton Park NY (1791)

Clifton Park is a township in the state of New York, located in Saratoga County. The town is located in the southern reaches of the county, only approximately 12 miles from Albany, the state capital. The southern border of the town is marked by the Mohawk River, where much of its history originated.

The history of Clifton Park dates back to Dutch settlements in the area, but prior to European settlers, the area was home to Native American tribes. The Mohicans and Mohawks lived in the area and referred to it as Canastigione, or “corn flats” because they grew corn along the shores of the Mohawk and Hudson Rivers.

History of Clifton Park, NYEventually European settlers came to the area and settled nearby in what was then just Halfmoon. The Dutch began to cross over to the area that would later split to become Clifton Park and Halfmoon within the late 1600s. Families traveled across the Mohawk River from the Schenectady area, creating more permanent settlements.

Lord Cornbury, also known as Edward Hyde, the 3rd Earl of Clarendon, was awarded the title of Governor of New York in 1701 after his support of William III of Orange in the Glorious Revolution. One of his duties was to grant land patents, and he and other European authorities began to grant land patents in the area around Clifton Park.

The area that would become Clifton Park was named by Nanning Harmansen in 1707. He wrote to Lord Cornbury for Letters of Patent when Harmansen had purchased the area from the indigenous peoples who were originally living in the area.

Travel around the area became more commonplace, as settlers began using the Dunsbach Ferry in 1710. Eldert Vischer established Vischer’s Ferry on the shores of the Mohawk River. An important place  in the community, Amity Church was established as a place for the area’s Dutch community to worship, rather than needing to travel across the river to the Niskayuna Dutch Reformed Church.

Amity Church was a center of the community, and it eventually had to be replaced with a larger structure for its congregation. In 1871, a new Amity Church was built, but it was destroyed by fire less than two decades later. The congregation built a new church on its location in 1888, which still stands as a historic site.

As of 1723, a census shows that there were at least twenty settlers living in the area, which was still referred to as Canastigione. The site became important historically with famous visitors, such as George Washington.

Nicholas Fort maintained an area on the Mohawk River known as Fort’s Ferry. He also had a public house prior to the American Revolution. George Washington traveled across the river by ferry at this location and supposedly stopped at Fort’s tavern while he was in the vicinity in 1783, during his northern tour.

Before long, transportation would lead to the town’s expansion. The Erie Canal opened in 1825, and Halfmoon was on its shores. With its burgeoning popularity, the town got too large to maintain at its size, and Clifton Park split from Half moon on March 3, 1828. The town’s initial name was Clifton, but it became Clifton Park on March 3, 1829, when Clifton Park took the name of the 1708 Clifton Park Land Patent.

Clifton Park had its first town meeting in 1828 at Grooms Tavern. This location has remained a major historic feature of the town, initially starting out as a grocery store. It was a popular shopping spot for local families, until it became a tavern in 1828 run by James Groom.

As a major center of town life, James Groom became an important figure in the town’s history. Multiple meetings occurred annually at Grooms Tavern, and Groom himself served as town clerk from 1832 to 1835. He was also the town supervisor from 1836 to 1837. Groom’s son added several businesses to what would become the Grooms Tavern Complex, including a blacksmith’s shop and a wagon repair business.

Grooms Tavern went through several incarnations, including turning back into a store, before it was eventually bought by the Town of Clifton Park. Since 2007, it has served as a historic and cultural center, with the downstairs restored for future generations.

Clifton Park maintained itself as an agricultural town for many years. Commerce and visitors came via the Erie Canal, while mills were built along the Mohawk River. Many people had farms and even apple orchards, as the Macintosh apple was developed here and introduced to the world.

Churches began to be built throughout the township of Clifton Park and were found in many different denominations. One-room schoolhouses were also built, and these aspects of daily life anchored the families in the region. The schools were brought under the auspices of the Shenendehowa Central Schools in 1950, which helped unify the area.

In the 1960s, a major change happened in Clifton Park. The Adirondack Northway, also known as I-87, was built and connected Clifton Park to cities, including the capital city of New York, Albany. What was once an arduous journey became an easy commute for residents of Clifton Park, especially as bridges took the place of the Erie Canal system.

There are several major hamlets found within Clifton Park, and many of them have a basis in the town’s history. Grooms Corners contains the Grooms Tavern Complex, as well as the Mohawk Valley Grange Hall, both places on the National Register of Historic Places. In the southern part of the town, you can find the hamlet of Vischer Ferry along the Mohawk River. Rexford was the location of Rexford Flats, located along the western edge of town and the Mohawk River.

Nowadays, you can find just about anything you’re looking for such as office space for rent Clifton Park NY. It has a bustling business atmosphere, but you can travel a little way outside of the city and go picking apples at one of the local orchards. In addition to historic sites, such as Amity Church, you can find plenty of recreation options for your family.

Featured Image Credit: Peter / flickr

In Post Image Credit: Weiss Gallery / Wikimedia Commons

Open Plan Offices – A Failed Experiment?

Open Plan Offices - A Failed Experiment?

If you’re searching for commercial space for rent you might be considering moving into a building with an open plan design. While this office design is great in theory you might want to rethink the type of office leasing you’re looking for – open plan offices have a few problems that may affect the workflow of your employees. 

The theory of an open plan design is sound. The lack of small, enclosed rooms (such as private offices) coupled with a wide, open layout theoretically should encourage workers and managers alike to interact with one another and prompt collaborations.

However, a fairly recent study has revealed that workers are doing the exact opposite of collaborating with one another — they’re keeping to themselves more than ever. To conduct the study, researchers used microphones and electronic badges to track email use and the level of interaction among employees.

The study revealed that employees had decreased face-to-face interactions by 73%. Instead of interacting with one another employees buried themselves in text messages and emails which both saw an increase of over 67%.

What's the Argument for Open Plan Offices?

What’s the Argument for Open Plan Offices?

The concept of open plan office spaces seems like a great idea. Studies show that our social environment contributes significantly to our ability to stay motivated and work that much harder. Furthermore, work environments today are places where “playing well with others” has become more essential than ever.

That’s why the idea of an open plan office makes complete sense. The workplaces that have higher interaction amongst employees tend to not only improve work output but also improve job satisfaction, as well.

One major influencer of employee productivity, job satisfaction, and improved willingness to collaborate with others is the design of the workplace (theoretically anyway). The entire point of the open plan office concept was to create a wide space that discourages independent work and encourages more social interaction.

The open plan office concept was all about creating a sense of community — solo work would be reduced in favor of a group based effort which would (theoretically) improve overall work output.

It turns out workers need one vital factor to concentrate – privacy

One aspect of productivity that the open plan office design didn’t take into account was the fact that employees require privacy to get work done. Imagine yourself in an open plan office — every movement, every bit of conversation, every individual — all visible to you and serving as distractions from your work.

On average it takes about 23 minutes to get back on track after you’ve been distracted. Thus, employees try to make up for these distractions by expending additional mental energy to regain their concentration. As a result, they tend to communicate even less with their coworkers, research shows.

During these periods of constant distraction workflow is interrupted, and the employee will likely perform at a lower level than average. Efficiency and productivity will decrease, and mistakes will arise.

Focus is the key word here. The failure of open plan offices lies with the fact that employees aren’t able to focus. There are just too many people doing too many things in too dense an area for anyone to truly concentrate on their work.

What the cubicle design gets right is that it allows employees to bury themselves within their own little world as they focus on their work, free of distractions. Focused work is the key to productivity. When focus is taken away so is an employee’s ability to stay truly productive.

Why aren’t employees making more of an effort to collaborate?

Whether intentional or not, open plan offices were designed to increase collaboration and interactivity at the expense of concentration and focus. The problem with this concept is that employees expend emotional and cognitive resources attempting to make up for their lack of focus. As a result, they’re not as willing to collaborate with others.

Further research indicates that the combination of lack of privacy along with increased crowding in the workplace often puts workers on the defensive and office relationships are strained as a result.

The real reason why open plan offices fail

There’s no such thing as a one-size-fits-all for office designs. As individuals, we all view workplaces differently. Where one person may find an open plan office to be the perfect environment for getting collaborative work done another person may see it to be incredibly distracting.

Concentration and focus will always be the foundation of productivity. That’s why organizations should attempt to find a workplace solution that not only allows employees to have a certain degree of privacy (which leads to increased focus) but also fosters the need for more interactions amongst employees.

If you happen to be searching for office space for rent in Clifton Park, we can accommodate you. Atrium properties has over 40 years of experience in building and managing office buildings. We always ensure our tenants are paired with the ideal commercial property for rent because we know that if our tenants are successful, we’re successful. Contact us today for more information.

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How to Calculate Commercial Rent

How to Calculate Commercial Rent

There are a variety of ways of calculating commercial office space for rent. Which calculation you use often comes down to the type of tenant business renting out the space. However other factors to take into consideration include business revenue, the state of the economy and so on.

In some cases, a tenant is allowed to pay lower lease payments during periods where they’re expected to make less revenue. This is where the demand cycle comes into play. There will be some months that do better than others due to the ebb and flow of customer demand.

It’s up to the tenant and the landlord to work out a lease agreement that will satisfy both parties.

What types of rental properties can you find?

There are many types of commercial rental properties. These include:

  • Retail space
  • Strip centers
  • Professional offices
  • Shopping malls
  • Freestanding buildings converted into office spaces

Sometimes it can be difficult to find a good commercial tenant. Businesses that have experienced success rarely change locations unless they’ve outgrown their current location. However, if a good tenant shows interest in one of your office rentals (emphasis on good tenant), you can potentially enjoy years of steady, dependable rental income.

In addition, if the space is located in an area with high foot traffic, your tenant will want to continue leasing the location for a long time. The business world is often uncertain, and there’s no guarantee that moving to a new space will allow them to experience the same level of success as they have in their current rental space.

Lease Types

There are various lease types to consider when you have commercial property for rent.In most cases, the lease type is determined by the type of tenant business moving into the office space for rent. Let’s break down each lease type, analyzing how they work and how they’re calculated.

Percentage Lease

Businesses must adhere to demand cycles, meaning they will have their good months and bad months in terms of cash flow. Factors that affect the demand cycle includesthe location of the office space for lease and the economy. If the economy isn’t doing well, for example, there’s a good likelihood that business will slow and cash flow will begin to trend downward for a time.

With these factors in mind, landlords and tenants sign a percentage lease in which the landlord determines a minimum base rent (typically an affordable amount the tenant should be able to work with despite demand cycles), and then have the tenant pay a percentage of their retail gross income along with the base rent amount.

Percentage leases benefit both the landlord and the tenant because during months where business may be slower, the tenant will be able to pay less and stay afloat. On the other hand the landlord benefits because they will receive more rent when business begins to pick up. It’s a win-win for both parties.

You can calculate a percentage lease in two ways:

  • Minimum base rent + percentage over a certain base amount

With this particular calculation, the tenant will pay an agreed-upon minimum base monthly rent, and then add together the percentage of all gross receipts over a specific base amount. Let’s look at an example.

Let’s say base rent per month is $1,200, and 3% of all gross receipts over $45,000 per month. If one month’s gross receipts come out to $80,000 we can calculate the equation in the following way:

$80,000 – $45,000 = $35,000

$35,000 x .03 = $1,050

$1,050 + base amount of $1,200 = $2,250

  • Minimum base rent + percentage of all gross receipts

This calculation is a bit different in that you don’t wait to see what your bottom line revenue is going to be for the month before you calculate the percentage. Essentially, rent will be paid on all gross receipts from zero. Let’s look at an example.

$1,000 base rent + 3% of all gross business receipts. Thus, we would take 3% of the entire $80,000 (using the previous numbers) and add that to the base rent. You can calculate that with the following equation:

$80,000 x .03 = $2,400

$2,400 + $1,000 = $3,400 monthly rent

Rent Per Square Foot

When calculating usable square feet, understand this is the actual amount of space that the tenant is occupying. Rent per square foot is often used when multiple tenants are sharing the same building. Keep in mind there will be parts of the building that both tenants will use such as lobbies, elevators, hallways, bathrooms and so on. These are called common areas.

When it comes to paying rent on the common areas, the number of square feet for these spaces (hallways, elevators, etc.) is typically divided amongst both tenants at a prorated amount. Both tenants will pay a portion of the landlord’s expenses for these shared areas.

When you’re doing a calculation for rent per square foot, rent will be set at a base amount per square foot of the commercial space. You can calculate this amount either monthly or annually.

Annual example: A 2,000 square foot office space has a rent of $12.00 per square foot.

The equation for this calculation is as follows:

2,000 x $12.00 = $24,000 Annually

You can then divide the above number by 12 months to get your monthly rent (example):

24,000 / 12= $2,000 per month

Conclusion

Commercial space rent negotiation can be complicated at times. Business tenants need to know how much they’re spending on operating costs so they know exactly how much they can spend on rent each month while still leaving room for profit. On the other hand, landlords should have their costs of ownership firmly in mind. Therefore, each party should strive to meet at a middle ground where they will both benefit and be happy with the arrangement.

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Commercial Property Classifications & Types of Office Spaces

Commercial Property Classifications & Types of Office Spaces

If you’re looking for a commercial space for rent, it can be understandably difficult to pin down the perfect location. After all, with all of the various types of commercial property classifications and types of offices for lease to choose from it can all get a little bit confusing.

Don’t worry. We’ve assembled a guide to help you differentiate the various commercial property classifications to help you stay ahead of the curve as you search for the perfect commercial property for rent.

Understanding the different classifications of office spaces  

Generally, office spaces are separated into three categories — Class A, Class B, and Class C. Each classification is usually determined by  a number of factors that include aesthetics, amenities and the age of the building. Let’s take a more in-depth look at each classification type.

Class A Office Space

Class A office space provides the best of the best when it comes to amenities and location. For example, Class A office leasing typically comes with on-site workout facilities, massive media centers, cafeterias, conference rooms and much more.

Typically, Class A buildings are either completely brand new or have been significantly improved over the past few years. It terms of positioning, Class A buildings tend to be located in busy locations such as major roads, the center of business districts and anywhere else that’s generally busy with pedestrian traffic. An example of a Class A building would be a skyscraper located in the downtown area of a major city.

The amenities and prime location of Class A buildings come at a price, however. Rent is astronomical, but of course, if you’re leasing a Class A space, your business likely makes enough to easily cover the expense.

Class B Office Space

Class B Office Space

Class B office rentals are also excellent locations for respectable businesses to set up shop, but they aren’t quite as nice as Class A buildings. Class B office buildings are great alternatives for businesses who desire a high-quality building without having to pay the high cost of leasing a Class A building.

Sometimes, Class B buildings can be found in decent locations such as major commercial areas. However, you’ll often find a vast majority of Class B office spaces in the suburbs. Interestingly enough, a good number of Class B buildings were once classified as Class A, but due to age and deterioration, they have been downgraded to Class B.

Class B amenities can be just as good as their Class A counterparts though they tend to offer less benefits overall. With the right upgrades and renovations (along with an increase  in amenities), a Class B building can eventually be bumped up to a Class A.

When it comes to rent, Class B office spaces are considered to be average for their respective markets. As stated before, Class B buildings are excellent choices for businesses who want a quality building without paying the high rent costs of a Class A building.

Class C Office Space

As you’ve likely guessed, Class C buildings offer far less than Class A and Class B buildings. They’re usually much older than their nicer counterparts and don’t provide as many amenities. When it comes to location, they tend to be located in undesirable environments.

Class C properties may not be attractive to larger businesses, but they’re perfect for startups who are operating on a shoestring budget. Class C office spaces give smaller start-up businesses an opportunity to spend most of their money on more important areas of their business such as growth. In the meantime, they’ll still have a building to operate out of until they can afford something nicer.

Types of Office space

Classifications rely largely upon the quality of the building. However, office spaces can further be broken down into various types.

Traditional Office Space

This is your most common type of office space. Most people are familiar with traditional office spaces because  they’ve either worked in one or have seen it on television shows and movies.

All traditional office spaces usually have the same layout — cubicles, conference rooms, a reception area, private offices, break rooms, and a mailroom.

Creative Office Space

This is the type of office space that’s very open in design. You won’t find any cubicles in this type of environment, and there’s a chance you won’t find many private offices either. 

You’ll often find floors that aren’t carpeted, and the ceiling has an “open” design where the ductwork is exposed. Creative office spaces have all sorts of collaborative spaces such as group workstations and conference rooms.

It’s not entirely uncommon to find amenities to make employees as comfortable as possible. These includes game rooms, break rooms, a large kitchen, lounge areas and more.

The purpose of creative office spaces, as the name implies, is to help employees feel more creative as they go about their daily jobs. You can find creative office spaces in all three classifications of office buildings, and they’re popular amongst both small and large businesses. In fact, even major corporations have renovated entire floors of their Class A office buildings into creative office spaces.

Co-Working Space

With so many people turning to self-employment, co-working spaces are becoming more and more popular amongst freelancers and startups.

Essentially, co-working spaces house several entrepreneurs who rent a single small space for themselves. Co-working spaces often have open areas where tenants can gather together to interact and bounce ideas off one another. This is the perfect arrangement for those who don’t have a significant budget dedicated for monthly rent.

Co-working spaces come with a variety of benefits. For one they save the tenant thousands of dollars in rent. Some co-working spaces are flexible enough to offer week to week renting or even day to day. The most common arrangement is month to month in which the tenant can walk away at the end of the month if they so desire.

Co-working spaces are also all inclusive which means all expenses including utilities, common area maintenance (CAMS)  expenses and insurance  are covered. This gives tenants the freedom to operate without having to worry about the various expenses that normally come with operating a business out of a office space for rent.

Other office space types

Another type of office space that has yet to be mentioned are flex spaces. Flex spaces are ideal for those who require the entirety of their business, both the front end and the back end, under one roof. For example, a tenant will have their warehouse, accounting department, reception area and call center all in the same building.

Finally, there are executive suites which operate much the same as co-working spaces except they’re more professional. Office suites are ideal for remote sales teams and other smaller businesses who wish to benefit from a more professional setting while still keeping monthly rent relatively low.

Finding the right type of commercial space for your business

Understanding the various types of commercial property classifications and types of offices for rent will allow you to plan out which space is right for your business. If you’re looking for commercial space in the Albany, NY area, then look no further than Atrium Properties. We can help you find the perfect building for your business so that you can get up and running. Contact us today to get started.

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Ten Questions To Ask Before You Sign A Lease

Ten Questions To Ask Before You Sign A Lease

If there’s one thing you take away from this article it’s this — never take a lease for granted. The terms may seem friendly and accommodating up front, but even one misread sentence could lead to years of aggravation and headaches. Signing a lease can be one of the most significant contracts a small business owner ever signs. That means you should approach every lease with care. If not, you might end up regretting having signed that dotted line.

Let’s take a look at ten questions you should ask before you sign a lease.

1) How much is the rent?

When leasing office space, rent is just another part of doing business. But even looking for the cheapest rent that you can possibly find can be challenging.

Generally speaking, rent for commercial spaces is determined by the annual cost per square foot of the space. However, there are around five ways to calculate rent that all use square footage as a basis for comparison.

Gross leases

With a gross lease, the tenant is required to pay a flat monthly amount. Landlords are responsible for insurance, repairs, taxes, and any other expenses that come with operating out of the building.

Net leases

This is an agreement that requires tenants to pay for some or all of the taxes on a property, in addition to rent.

Net-Net leases

On top of paying taxes and rent, the tenant will also be responsible for paying insurance.

Net-Net-Net or Triple Tet leases

These types of leases are usually written for industrial properties. The tenant is not responsible for any of the costs associated with operating out of the building. This includes maintenance and repairs.

Percentage leases

This is a special type of rental where tenants pay a fixed rate plus a percentage of gross income. Percentage leases apply to retailers, with an emphasis on shopping centers and malls.

Can you sublease?

2) Can you sublease?

Let’s say you move into an office space for rent that’s ideally suited for your business. However, a few years into the lease you’ve grown to twice your size and your current facilities are no longer adequate. You can’t leave without breaking your lease, so what do you do? Simply put, you can find a tenant who meets the same standards that the landlord comes to expect from all of his or her other tenants.

Thus, subleasing occurs when the tenant rents to a subtenant. As mentioned before, the new tenant must meet the standards of the landlord. Therefore, you must vet the tenant to ensure they meet those standards.  Furthermore, if your subtenant decides not to pay, you’re still bound by the original lease to pay the rent.

Read the language of your lease carefully. Sometimes the new tenant will pay more than you did for the rent. The question of who gets the extra money might become an issue if you’re not careful. Be upfront with your subleasing privileges from the beginning to avoid issues like this.

3) Who else can move in?

It would be a real pain if a manufacturing plant moved directly next door to your law firm. It would be even worse if a competitor moved in. What would happen if your neighbor brought in the wrong type of crowd — the kind that scared away your customers.

Zoning laws may be more of a blessing than many of us realize. They protect businesses from moving next door to an incompatible neighbor. If you feel your landlord’s limits aren’t stringent enough regarding who can move in next door to you, then you can negotiate for stricter qualifications. However, this may come at a price. The stricter your limits, the harder it will be to find a new tenant if you decide to sublease.

4) What building service do you get?

Before signing a lease for a commercial space for rent, you should identify what services you’re entitled to. For example, every business needs electricity to operate. You also need running water for bathrooms. Let’s look at a couple of points you need to keep in mind:

  • The cleanliness of your business is essential for public perception. Therefore, you should request that cleaning services be included as part of the lease. Part of this negotiation should include the frequency at which the building is cleaned and whose responsible for the nuances of house-keeping, such as vacuuming, cleaning the bathrooms and taking out the trash.
  • In most cases electricity will be covered by the landlord. However, many landlords set reasonable limits on how much electricity you can use. If you exceed that limit, you may have to pay the difference.
  • Heating, ventilation, and air conditioning (HVAC) is also typically covered by the landlord. Regardless, you may still have to do a bit of negotiating

5) Can you renew?

When your lease has expired you have two options: move out or renew. Legally speaking, your landlord doesn’t have to offer you the same space once your lease has expired. That’s why it’s important to negotiate this part of the lease early. You should have a clause that guarantees that you have first rights when your lease has run its course. If not, you’ll have to pay the prevailing market rate to keep the space.

To renew their lease, a tenant typically has to give written notice. A tenant should submit this notice about one year before the expiration of the lease for long-term leases. Short-term leases are around three or four months.

If you don’t want to worry about letting your lease run out accidentally, you can set to renew automatically until you take measures to cancel that arrangement. Automatic renewals are especially beneficial to businesses with multiple branches where it can be challenging to keep track of all of the renewal dates of the separate locations.

6) Who’s responsible for insurance?

As leases are finalized, and tenants prepare to move in, insurance is often overlooked. As a result, the commercial property for rent  will likely be covered by a variety of insurance agencies that overlap one another.  Therefore, the price is more expensive than it has to be. Furthermore, the landlord will run into all sorts of trouble if catastrophe were to strike.

For example, let’s say a fire rips through the office space for lease. It may take several years for the various  insurance agencies to sort out who pays what or what’s covered vs. what isn’t covered.

Generally, landlords have a comprehensive policy on the building to cover liability for common areas such as elevators, stairways, lobbies, bathrooms, etc. They also provide casualty protection for the building itself.

With that being said, landlords are well within their rights to insist that the tenant maintain their own insurance to provide protection from being sued by a customer who may injure themselves due to the conduct of the business.

7) How long will the lease run?

Generally speaking, commercial leases can run anywhere from 3 to 10 years, and you can negotiate the terms with the landlord. Not only should you determine when the lease should begin but also when it ends. Last minute problems tend to pop up if you haven’t verified if the property is ready for you to move in yet.

For example, construction on the building may be taking longer than intended, or you may disagree with the landlord about making your own renovations. You may even run into a situation where the old tenant refuses to move out!

With that being said, your lease should tell you what will happen if your rental space isn’t ready to be occupied by the move in date. It should also spell out how the landlord will accommodate your inconvenience. Be careful about moving out of your old premises too early. If you happen to move out of your old space and your new office space isn’t ready for you to move in yet, you might end up in a situation where you have to operate out of your van until you can figure things out.

8) How much will the rent go up?

Today, costs can be wildly unpredictable; so much so that many landlords insert escalation clauses in their leases to protect themselves. There are many common types of escalation clauses. One type of escalation clause passes on prorated increases in taxes, maintenance, heat, and other direct costs. Other clauses build in regular step-ups in rent over the life of the lease while others raise rent according to the Consumer Price Index.

9) Who pays for improvements

Most modern-day office buildings allow for renovations to be made such as lighting, carpeting, paint, and so on. However, these types of improvements are contingent on what the tenant feels they need to improveand what the landlord will allow. Frankly, improvements are often the most negotiated aspect of any lease. Many tenants and landlords have battled over the issue of improvements to a leased property.

The point of contention typically revolves around the high cost of improvements. For example, even minor renovations such as installing a single new electrical outlet can cost as much as $100 to install.. The cost would be much higher if every outlet in the building needed to be replaced.

Heavy duty carpeting can be even more costly, running as much as $20 per yard. That certainly adds up if you’re trying to carpet an entire building. If you’re looking to hire carpenters, painters, or any other tradesmen they can charge as much as $15 – $30 an hour for their services. Overall, the costs add up quickly.

The best way to convince a landlord to foot the bill for significant improvements to the property is to convince them the renovations will attract future clients even after your lease has run its course. Expect strange requests, such as an unusual paint color and carpeting with weird patterns to be rejected. Such renovations add no value to the property, but this, of course, is dependent on what the landlord allows.

All agreements pertaining to improvements should be put down in writing. Ideally, you should also include an estimate of costs from a contractor and detail floor plans before signing the lease. This document is called a “work letter,” and it also states who owns the improvements made to the property.

For example, improvements such as shelves, office desks, cabinets and the like will typically belong to the landlord regardless of who pays for it. That’s why specifying who owns the improvements is very important.

10) What happens if your landlord goes broke?

This is a worst-case scenario, but it certainly happens from time to time. Let’s say you’ve spent thousands of dollars on renovations to a new office space. All is well for the first few months, but suddenly a representative from the bank shows up and tells you that your five-year lease is void because the bank has foreclosed on the building. They give you the option of staying, but atthree times your original rent. Otherwise, you have thirty days to move out.

This kind of stuff happens, so you need to protect yourself the best way you can. You can avoid such a situation with a standard “recognition” or non-disturbance clause. This ensures that the rental agreement between the tenant and the landlord will continue under any circumstances. Non-disturbance clauses were created to protect the client on the chance that the landlord goes bankrupt.

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