Archive by Author

Will WeWork Conquer The Real Estate Market?

28 Feb

Actually, WeWork wants to do more than just conquer the real estate market. The ambitious plans for this rapidly growing company includes expanding into residential real estate, high end fitness, and even education. A recent NY Times article describes the enthusiastic goals of  WeWork’s founder. One has to wonder if  WeWork will become the Amazon of the real estate market and change the paradigm of how companies of all sizes use space. This company is a real global landlord to contend with – 2017 revenues were $900m and it will continue to grow in 2018 as they plan on expanding from over 200 locations to 400.

By capturing the imagination of entrepreneurial as well as Fortune 500 companies, and fulfilling the desires of how millennials view the work environment, WeWork appears to have revolutionized how we work. Rather than occupying staid, plain, vanilla office buildings, at WeWork, employers now have the option to lease flexible, fun and creative work environments with chic decor, with many amenities, where their employees enjoy working, never have to leave the office, and are inspired as a result.

The WeWork concept includes flexible lease terms, comfortable, and creative spaces where the theme of the decor and amenities may change depending upon the location. WeWork offers facilities in hip downtown locations around the world including 303 locations in 62 cities. Amenities include free flowing beer, piped in music, fitness facilities, social networking venues and more. An elementary school and wave pool for inland surfing are other concepts currently being developed.

But will WeWork succeed in becoming a game-changer in how we lease space? While WeWork definitely serves a niche – and a growing one at that – there will always be a place for more traditional space alternatives. As an example, for now it appears that WeWork does not aspire to penetrate suburban areas. Leave other experienced real estate developers that are increasingly adding their own amenities to office parks for that. There will also continue to be a role for traditional landlords in downtown markets. For example, law firms, insurance companies and financial service companies that occupy large blocks of space for a lengthy period of time will need their own corporate identity, perhaps their own office tower, and with their own unique corporate image. As companies see the expanding trend of younger talent seeking employment in urban environments, this fast growing company is quickly becoming an 800 pound gorilla to contend with in downtown markets.

Not to be outdone, many upstart co-work facilities have also been expanding in downtown areas. Knotel in New York, the Cambridge Innovation Center, WorkBar and others in Boston are seeking to disrupt how we use space. Given this trend, we should be cognizant of the possibility of over saturation of the co-work concept.

Is the co-work concept right for your business? Contact me to further discuss this and to review your specific space requirements to find the best solution to your commercial real estate requirements.

Warren Brown, President, Boston Commercial Properties, Inc.

All information provided is from sources deemed to be reliable, however no warranty or representation is made as to the accuracy thereof.

Finding A Creative Solution To Solve Client Real Estate Requirements

07 Sep

In extremely tight market conditions, clients and brokers need to think creatively to find the right solution to acquire real estate.  Such is the case today. With a shortage of real estate inventory for sale, prospects seeking to acquire property to meet their needs may wait for months or years, if ever for a solution to hit the market. Even then, tight supply leads to pent up demand, heavy competition and increased pricing.

A creative strategy can include the client identifying off market target properties that are appealing and then have their broker inquire with the respective ownership as to possibilities for the target properties being for sale. Incredulous that this is a worthwhile endeavor? Earlier this year, one of my clients took on this strategy. After identifying a target property that was not on the market, I contacted the owner to inquire as to the possibility for the property being for sale as an off-market deal. The property was currently under lease at the time but with a flexible term. Turns out that 1) The existing tenant desired to terminate its lease 2) The owner, being older and seeking to simplify his portfolio was indeed seeking to divest this asset and 3) He had already been in discussions with another party to sell. This was indeed fortuitous timing. We quickly structured mutually agreeable terms for a streamlined transaction. The Seller was interested in a fast-tracked sale with a strong comfort level of closing and my client was able to deliver. The deal was finalized within 60 days and both parties were happy.

It is important that the client work through its broker to communicate with potential sellers for several reasons. A professional broker will know how to present the inquiry on the client’s behalf and ask the right questions. A buyer may also want to shield its identity to not reveal it is in the market and further protect it’s identify and financial capacity. For example, if the client has high net worth, it is prudent to not allow the Seller to think there is very deep pocket to reach into. The Seller will also more likely reveal more to a broker than directly to a potential buyer. So the broker serves an important role to be a buffer between the parties.

In addition to targeting properties that are not at all on the market, a similar strategy can be implemented to target properties that are on the market for lease only. Sometimes, these properties linger on the market for a lengthy period and the owner gets frustrated with carrying an empty property. There is no harm in submitting an offer. This may sit while a seller ponders his options. It is important to present an actual written offer to indicate serious intent. The important point is that the broker must follow through and make the inquiries. Clients should retain a professional broker that is dedicated, will follow through, ask the right questions and represent the client’s interests as its trusted advisor.

Acquiring property for your business is a multi-faceted and complicated process. Please contact me to review your specific real estate requirements and find the best solution.

Warren Brown, President, Boston Commercial Properties, Inc.

All information provided is from sources deemed to be reliable, however no warranty or representation is made as to the accuracy thereof.

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.

All information provided is from sources deemed to be reliable, however no warranty or representation is made as to the accuracy thereof.