Tag Archives: boston

How to Procure the Ideal Warehouse Space for your business

09 May

There are a number of steps and factors to take into consideration when looking for the ideal warehouse space to accommodate your space requirements. I always tell my clients to start with their ideal list of space needs, if you start off with less than ideal objectives then you will certainly end up with sub-par results. Begin the process with a thorough space planning exercise. A knowledgeable real estate broker can help you with this and supplement with an experienced architect and/or engineer to develop your space program as needed. One underlying question throughout this process is how will your company use its new space? For example, are you looking for maximum clear height to fully utilize cubic space or does lower ceiling height work? With high bay space, material handling equipment and heavy duty racking is needed so cost of this needs to be taken into account. Other requirements to consider:

  • Loading needs: What is the anticipated truck activity? Will full size tractor trailers be used and/or box size delivery vehicles and vans? If full size trailers are anticipated, then appropriate truck apron space is needed. This requires a minimum of 100 ft. of depth to allow for the trailer to back in. Is Drive in loading needed? If so, and interior garaging is required, then gas/water separator, ventilation and CO2 monitors will be required to meet fire, life/safety code. What is the anticipated volume of truck activity? How many loading doors are needed? This is important to insure the free movement of vehicles to minimize waiting and labor costs. Proper truck level heights and need for levelers should also be evaluated.
  • What is the product flow and ideal configuration? Rectangular works better than long and narrow.
  • Parking and outside space: Include your parking needs including auto and truck spaces in your list of requirements. Also is outside storage for trucks and/or product required? Note that not every municipality allows outside storage. Confirm local zoning ordinance for this type of use.
  • Quality of space: Class A modern or lower price Class B? Is image important? Headquarters quality or just plain functional?
  • Fire suppression: Is ESFR sprinkler system important or basic system? Wet or dry system? If you plan on not heating your space then dry system is needed. Note that sprinkler systems can be converted to the type of system that is required – at a cost. Also, very important is understanding the local municipal fire codes for sprinkler systems. Enforcement code for distance from sprinkler heads to top of racking varies from one town to another. In rack sprinkler may be required depending upon the nature of the product.
  • Floor load: What are the floor load requirements for stacking the product? Ceiling height and height of racking are important considerations. Testing of a core sample of the floor of the candidate property by a structural engineer may advisable.
  • Energy efficiency. Will you be heating and cooling the space? Understanding the R factor of a roof and how well walls are insulated should be investigated when evaluating properties.
  • Lighting: Sodium vapor and fluorescent lighting fixtures no longer meet code. Energy efficient fixtures such as T-8 or even T-5 lighting should be installed. Energy companies still offer rebate programs to install these.
  • Location: Perhaps the most important factor. Is the stem time to ship to your customers the primary concern? Commuting distance for your employees and future hires? Location will affect price as well as will quality of the space. In the Boston area, proximity to downtown has a direct correlation to price as does age, quality of the space and other factors such as ceiling height. Pricing for distribution space along Route 128 may be similar as space on Route 495 but higher quality/modern facilities with 30 ft. clear height, ample loading and parking and ESFR fire suppression systems are more prevalent along Route 495.
  • Cost: Budget for space is always an important factor. Besides base lease rate, have a full understanding of what costs are included and what are not included in the deal (see my 3/5/15 and 4/10/15 blog posts). An experienced commercial real estate broker can help you with this. A history of operating expenses should be obtained for candidate properties to understand costs involved with operating a property.
  • Special requirements. Does your business require other out of the ordinary type of requirements such as above spec power, storage of hazardous materials, etc. Also, determine amount and layout of office space required. Typical ratio of office to warehouse space found in distribution facilities is 5% of total building area. An experienced commercial real estate broker can advise your accordingly on these matters.

With the aforementioned ground work completed you and your broker will be prepared to commence searching for the ideal property.

While searching for properties, current market conditions should be taken into consideration to understand the challenges involved with finding the ideal space. Currently, national industrial vacancy levels are at a 30 year low and occupancy gains continue as e-commerce demand is absorbing space. Current trade policies may impact future vacancy rates as the Trump administration seeks to renegotiate or withdraw from NAFTA and has pulled out of the TPP. A knowledgeable commercial real estate broker that specializes in industrial space will understand current market conditions, trends, pricing and concessions being offered and be your advocate to help to negotiate the most advantageous deal on your behalf.

An experienced commercial real estate broker will also dig deeper and not rely on a simple Loopnet or Costar search for property but will have a distinct pulse on the market, the resources, relevant contacts and connections to conduct a thorough search to navigate the market and uncover ideal solutions. Further, the professional agent will continually look out for the client’s best interests throughout the negotiation and relocation processes.

Procuring the ideal warehouse space for your business is a multi-faceted and complicated process. Please contact me to review your specific space requirements and find the best solution to your specific commercial real estate requirements.

Warren Brown, President, Boston Commercial Properties, Inc.

Reflections on the Current Market: Summer 2016

17 Aug

In my November blog post, I described the how the commercial real estate industry is in sync with the economy. Good economic times are good for the commercial real estate market while recessions are definitely not. But what do current signals in the economy portend for the future for the commercial real estate market? Following extreme turmoil in equity markets at the beginning of 2016 and the Brexit vote in June, many of my clients have been inquiring about my prognosis for the future. Given current turmoil and uncertainty around the world, at this mid year point it would be a good time to look ahead.

First some basic important data points:

The greater Boston industrial market experienced 1,467,488 sf of positive absorption in the 2nd quarter. Vacancy rates decreased from 7.2% at the end of the first quarter to 6.9% at the end of the second quarter. Lease rates increased to $6.65 average quoted rate which is an increase of 1.7% from $6.54 per sf at end of the first quarter.* These are extremely impressive numbers with now three consecutive quarters of record-setting low vacancy rates.

The greater Boston office market experienced 770,417 sf of positive absorption in the 2nd quarter. Vacancy rates decreased from 8.7% at the end of the first quarter to 8.5% at the end of the second quarter. Lease rates also decreased to $20.47 average quoted rate which is an decrease of 3.5% from $21.21 per sf at end of the first quarter.*  While these numbers are more subdued than those seen in the industrial market, I see this more as a temporary pause in the market than a more severe event.

My observations of current economic conditions and connection to the commercial real estate include the following: There is an abundance of capital sitting on the sidelines. Investors are not comfortable with equity markets. Passive investors are suffering with ultra low yields. Historically low lending rates continue to act as a stimulus to the residential market, for investors and for owner/occupiers of commercial properties. Foreign capital is chasing both residential real estate including high-end condominiums such as Millennium Place where it is reported that 25% of buyers are from overseas, as well as multi-family and Class A office properties. All of this is generating a flight of capital and increased demand for real estate as a preferred asset class.

Many other economic indicators are positive. Employment is up, as evidenced by a robust July employment report, and jobless claims are way down. The GDP is positive and has improved quarter after quarter. Inflation remains low, while oil prices have more than substantially recovered. Foreign investors are investing in U.S., which is viewed as a safe haven.

Overall, I have an optimistic outlook for the commercial real estate market as we head toward the homestretch of 2016 with no recession in sight for 2017.

Please contact me to discuss your specific real estate requirements

Warren Brown, President, Boston Commercial Properties, Inc.

*Data source: Costar Realty Information.

Selecting a Full Service Commercial Real Estate Brokerage Firm

23 May

The most effective commercial real estate brokerage firm provides a full spectrum of services to its clients. Companies that require assistance with leasing or purchasing of properties and relocation can benefit from working with a firm that will assist with its search for property, i.e. tenant representation, and provide guidance throughout the relocation process.

A fully qualified tenant representative focuses on the client’s best interest, has thorough knowledge of the relevant marketplace, and deep experience in the industry. With the client’s best interests in mind, the tenant representative will provide the client with recommendations to procure the best solution to solve the client’s real estate objectives. An effective tenant representative will negotiate on the client’s behalf to secure the most favorable deal terms as well as augment the client’s legal team with review of lease and purchase and sale documents to avoid pitfalls in such contracts.

A full service tenant representatives job is not done when a lease is signed or a sale is closed. The client has the sometimes daunting task of relocating its business. This can be a stressful, time consuming and overwhelming task. A skillful tenant representative has the capabilities necessary to provide assistance to the client throughout the moving process. Such capabilities include the following:

  • Relocation scheduling and budgeting.
  • Facility planning services and financing of tenant improvements.
  • Obtaining the most professional vendors at the best pricing.
  • Provide guidance with purchasing of furniture, phones & IT.
  • Provide assistance with installation of Fixtures, Furniture & Equipment.
  • Guidance with miscellaneous items such as data storage management and new hires.
Real estate costs are typically the second highest cost on the expense side of a company’s P&L.  Identifying and finding the best solution for our client’s real estate requirements is critical to the success and profitability of the company. Boston Commercial Properties understands this and takes its client’s needs seriously.​ Please contact me to further discuss your real estate needs.
Warren Brown, President, Boston Commercial Properties, Inc.