Whether your firm plans to relocate to new office spaces or wants to stay where you are, you can do a number of things to help obtain the kind of functionality and appearance that your firm desires, often for less out-of-pocket costs than expected.
Our present marketplaces, including leasing/buying commercial spaces, as well as construction costs, furniture costs, and many smaller markets are operating in a relatively depressed state, as they have been since 2008. Although inflation is creeping a few prices up, such as copper wiring, most costs remain quite low compared to 2007 and earlier.
Commercial leasing costs, for example, still remain a bargain in most buildings in New England, including downtown Boston, where vacancy rates have not recovered to their former high levels. Class A Towers in Boston’s Financial District which might have been asking $80 and more per square foot in 2007 are generally now asking $40 -$60, and are often offering major financial incentives including healthy tenant improvement budgets and months of free rent. As a result, it is still possible today for a firm to economically relocate to another building that offers a better location, and/or more amenities, and/or is viewed as a “step-up” in quality, and can do so at a lower rent than the firm has been paying in their present building.
If your firm is interested in changing its layout to improve functionality, or if the spaces are “tired” and need refreshing, it is possible to achieve your goals whether you remain in your existing spaces or move. However both strategies can be disruptive: if you renovate your existing spaces, if not well managed the work can be disruptive to the firm’s ongoing operations; similarly moving can also be disruptive if not well managed. Careful planning prior to beginning either type of project reduces disruptions and can eliminate most, resulting in more productive work time for the firm. But how to ensure you are getting the most for your Tenant Improvement allowance (TI), or that the Turnkey dollars are being spent to maximize your company’s wishes? Planning and a clear vision are two crucial steps. Understanding where you want to end up will go a long way in determining what you need to ask for when negotiating the TI or work letter in your lease. Involve your broker early and review with them what you ultimately want the space to be and look like. It isn’t enough to just discuss square footage, if they are going to get you the best deal possible they need to understand all aspects of what they are negotiating for. Ask to see newly renovated spaces in your market place, get a feel for what the current trends are and think about what will work for you. Talk to a Project Management firm or engage them for a small consulting fee, they can help budget realistic numbers so you won’t think you are getting the new Ferrari but end up with the used Chevy.
One of our clients had decided to remain in their current space and expand 10% to an adjacent floor. They liked their building and location, but needed to refresh their space with new carpet, paint, ceiling tiles, some lighting, additional Audio/Visual equipment, and refinishing their wood furniture. By knowing upfront what they wanted to achieve, they aggressively negotiated with the landlord and were able to cover most of the costs through the TI allowance and could internally budget for what wasn’t going to be covered. By the project’s end they achieved the look they wanted and the functionality they needed for the budget that was planned.
Another client had outgrown their existing Class B building, and realized that the normal termination of their lease in 2009 afforded them an opportunity to seek out a better class building with a slight reduction in their monthly lease costs. The client was also intent upon find a brighter/lighter space than their existing dark and “chopped up with too many walls” spaces. The client and their broker conducted a careful search of Class A- buildings, found several which offered better locations, significantly more amenities, larger floorplates, better building management, and a perceived “step-up” in quality and appearance. Their broker obtained competitive proposals from the three finalist buildings, and together with our project management firm and the client, we were able to negotiate a TI budget which allowed the client to build in significantly more interior glass walls to help achieve the high amount of natural light which the firm sought for its spaces. They walked in to the project knowing what their goals were and realized the desired look and feel.
One more way of using today’s “bargain” markets to a firm’s advantage is to acquire better furniture now. Due to some of the downsizing which major firms performed in 2008 and 2009, there has been a plethora of used and barely-used office furniture on the market. In 2011 we were able to connect a client, who wanted to lower their workstations’ panel heights to a more collaborative level, with a used furniture broker and the result was that the client was able to replace their decades-old furniture which had become an impediment to their work process, with nearly new low workstations for far less cost than new furniture.
Don’t forget that even new furniture can usually be obtained for less cost now than several years ago, if nothing but new furniture will do.
In summary, the key to getting the look one wants is for firms to take advantage of the current soft market if at all possible, and to engage professionals to assist the firm with strategizing on the best approaches and implementing the selected strategy or strategies. Now is still the time to “not pay a lot for that muffler”.
