What’s the Price to Lease Commercial Real Estate?

What’s the Price to Lease Commercial Real Estate?

What’s the most common question our company is asked?

Every single prospect call we get – we are always asked the same question.

What’s the price to lease a space?

In this blog post, we will explain why this question is a little more complex than it sounds and why we don’t publish our rental rates.

(Side note: A big thank you to Amy Porterfield for this blog idea – it came direct from her podcast on How to Create Content to Attract Your Target Market.)

Following is a typical prospect phone call that we receive:

• Prospect: I’m looking for around 4,000 square feet of office space.  Could you give me some pricing information?

• Landlord: Sure, do you have an idea of the layout?

• Prospect: Large open space for cubicles, reception, 3 restrooms, break room, conference room and a few private offices.  What is the price?

• Landlord: Great, and what lease term are you seeking?

• Prospect: That likely depends on the price – what is the price?

• Landlord: What exactly is your timing:

• Prospect: Next 6-12 months, maybe sooner if you will just GIVE ME THE PRICE!!!

Why do we ask all these questions before giving a quote to rent a space?

Glad you asked.

Assume that we have 3 vacant spaces for the above scenario, with our prospect needing 4,000 square feet:

• Space 1: 3,600 square feet, similar layout to what is desired, available in 9 months

• Space 2: 4,200 square feet, completely different layout, available now

• Space 3: 5,000 square feet, similar layout to what is desired, been vacant for 12 months

If we had given pricing information solely from the space requirement, we might have quoted on Space 2, which is the wrong layout.   That phone call might have ended quickly.  But if we had known the prospect was looking at a long term lease, we might be able to remodel the space.

Space 3 is 25% larger than what is being requested, but we would be motivated to lease it at a discount given the fact that it has been vacant for so long.

If we had given pricing information solely on our current availability, we would have only quoted on Space 2 or Space 3, not realizing that the prospect could wait until Space 1 becomes available.

With this specific scenario, all 3 spaces could potentially work.  However, there are several factors to consider, including budget/timing constraints, layout, proximity to competitors, current lease expiration (both for tenant and landlord), etc.

Also, the above example is a simplified version of what might actually occur.  Allow us to further complicate this hypothetical:

• There is currently a tenant in Space 1, and they are unsure of whether they will be renewing the lease.  They have an option to renew for 3 years that can be exercised with 3 months’ notice, and their lease expires in 9 months.  We cannot sign a lease for this space until another 6 months passes, and the space might be unavailable if the option to renew is exercised.

• Another prospect is looking at Space 3 and will be deciding within the next month whether to pursue this space.  This specific prospect needs at least 4,500 square feet and can only lease Space 3.  This prospect is also interested in signing a 7-10 year lease, so it is worth holding out another month to see what happens.

• This leaves Space 2 as the only currently available option for our prospect in need of 4,000 square feet.  For a long term lease, we will remodel the space and have time to negotiate the lease and perform the renovations, since the tenant is looking 6-12 months in advance.

We hope this example was not too complicated.  Trust us, what happens in practice is often much more complex.

And the above example only dealt with office space.  We also lease warehouse space, which often varies even more from space to space than office.  Say we have two 5,000 square foot warehouse spaces available.  One has 500 square feet of office, and the other has 2,500 square feet of office.  Do you think these two spaces will have the same rental rate?  Of course not!

Now do you see why we cannot just publish a price without asking some qualifying questions?

Commercial real estate is not a commodity, like the gas you put in your car.  If you are choosing between filling your car up with gas from an Exxon or Shell station, you will likely not notice any difference in how your car runs.

In contrast, no 2 commercial real estate spaces are alike – even if they are in the same building!  In addition to different finishes and layouts, there are external factors, as described above, that can sway tenant and landlord leasing decisions.

Plus, a rental rate for a new business interested in a 1 year lease will differ from the rental rate for a national company signing a 10 year lease with substantial modifications.

We hope this post illustrates why many landlords (including our company) choose to not publish any leasing rates until some qualifying questions are asked.

Please feel free to leave questions and/or comments.  We read all of them.  You can also email us at leasing@seawaybusinesspark.com.  We provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  If you need commercial real estate space in our area, please give us a call at (228) 575-7731 or visit our website at www.seawaybusinesspark.com.

CRE and Carli Lloyd

CRE and Carli Lloyd

The Women’s World Cup final got us to thinking: What does commercial real estate have in common with the Carli Lloyd (Women’s World Cup MVP)?

An article was posted on Forbes with the headline “13 Minutes Equals Millions in New Endorsement Potential for Women’s World Cup MVP Carli Lloyd.”

For those of you who are unfamiliar with Carli Lloyd’s achievement, here is a quick recap: Within the first 16 minutes of the Women’s World Cup final this past weekend, Carli Lloyd scored 3 goals.  She scored all 3 goals within 13 minutes of one another.

Clearly, Carli Lloyd has a chance to cash in big.  Product endorsements will likely flow her way in the coming days/weeks.  And good for her – this was quite the triumph and on the biggest possible stage.

Now that you’re up to speed on Carli Lloyd, you may recall that we posted a market update for South Mississippi last week (link found here).  The gist of the update was that 2015 has been very promising for commercial real estate in South Mississippi, and we are hopeful/optimistic that this will continue into 2016.  (Apparently, last week’s post could have been summarized in one sentence.)

So, we ask again: What does CRE have in common with Carli Lloyd?

With the commercial real estate market on an incline, you have to make sure to seize the opportunity to capitalize.  Market booms don’t last indefinitely.  Eventually, the market will taper off (and thereafter, likely fall into a slump again).  When will this happen?  Nobody knows for sure.

Just like Carli Lloyd will have a better chance at landing huge endorsements in the coming weeks, everyone involved in commercial real estate will have a chance to land some monster deals in the coming months.  You must use the CRE boom to your advantage, because it will not last forever.

And in a good market, you should not sit back and figure you can reap the benefits by putting forth less effort.  You might be thinking to yourself, "Well, the phone is ringing off the hook.  So I can do very little work and still have increased success."

Trust us…the phone will eventually stop ringing. 

Make the most of the good times in commercial real estate.  Take advantage of the moment.  Carpe diem.  Seize the day.

Congratulations to Carli Lloyd and the entire U.S. Women’s World Cup team!

Please feel free to leave comments.  We promise to read them all.  You can also email us with any questions/comments at leasing@seawaybusinesspark.com.  As a reminder, we provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  For more information, visit our website at www.seawaybusinesspark.com or call us at (228) 575-7731.

South Mississippi Commercial Real Estate Market Update

South Mississippi Commercial Real Estate Market Update

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

As you may or may not know from previous posts, our company serves as a landlord in Gulfport, Mississippi.  We have a couple of properties that we manage that contain several office buildings and office/warehouse buildings. 

From time to time we will post market updates of what we see in our area in South Mississippi.

Like commercial real estate brokers, our best gauge as to how the local economy is doing is by the types of phone calls we are getting (and whether phone calls turn into transactions).

However, unlike local brokers, we only operate on one side of the equation.  We do not offer any of our properties for sale so we only see the leasing side of the local market.

Of course, we discuss our market with local brokers and get a good feel from just being aware of what is going on.  After all, when there are construction cranes everywhere vs. a bunch of for sale signs in front of properties, it is easy to tell what kind of market we are in.

The broad (national) market had a very good year in 2014.  By contrast, 2014 was a bit of a slow year for our company and local economy.  We heard rumblings of expansion from some of our larger tenants (the types of tenants who have a national presence).  We even completed an expansion with one tenant.  Overall though, businesses were still struggling and several businesses were closing (not just in our business parks – throughout the local economy).

As we read reports of the national market doing so well, we wondered, "Was the commercial real estate boom going to miss South Mississippi?"

To shed some light on this question, let us relay what our local banker told us when meeting with our company a few years ago.  The bank this representative works for is a large, regional bank that has locations that span from Texas to Florida.  He told us that in their experience, the South Mississippi market lags behind the rest of the country (no real surprise there). 

Further, once the bank starts noticing activity on the Florida Panhandle, it slowly makes its way west, first hitting Alabama and ultimately, increased (or decreased) activity hits Mississippi.

Since we heard this, we have seen this concept in action.  

Last year, the articles we read around the country talked about commercial real estate’s resurgence and how times were really picking up.  Would our banker’s advice hold true for 2015?

Halfway through 2015...so far, so good!

In 2014, we were getting calls from people not quite ready to pull the trigger.  Since the beginning of 2015, we have had new businesses looking to open locations in our area, some in our business parks.  We have had existing tenants either talk or go through expansions already.  There have also been phone calls discussing expansion for new clients.

The signs are all here for an improving local economy.  Our business park is not unique in having lots of new business.  Strip centers are filling up again.  For sale signs are being removed from the fronts of buildings.  New signs are going up.  Things are exciting once again in the commercial real estate market on the Mississippi Gulf Coast.

We can only hope that if our market lags behind the broad national market, and 2015 has been a better year than 2014 nationally, 2016 will be even better for those of us in South Mississippi!

Please feel free to leave comments.  We promise to read them all.  You can also email us with any questions/comments at leasing@seawaybusinesspark.com.  As a reminder, we provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  For more information, visit our website at www.seawaybusinesspark.com or call us at (228) 575-7731.

The Most IMPORTANT Part of Being a Landlord is...

The Most Important Part of Being a Landlord Is…

 

Image courtesy of Ambro at FreeDigitalPhotos.net

As landlords, we are always searching for our next tenant.

After all, we must seek new deals in order to expand our business and to fill our vacant spaces.

We look for good buys on raw land and buildings.  We market our existing office spaces and warehouse spaces.  And we solicit to prospects that we think would be a good fit for our business parks.

However, the most important part of our jobs as landlords is really quite simple.

It even sounds a little too simple.  Without this single action, we would not be able to stay in business.

That one thing is: KEEP YOUR CUSTOMERS HAPPY!

Sounds easy, right?

There have been numerous studies that find that signing up a new customer is 5x-10x more expensive than keeping an existing customer.  Some studies find that it costs even more.

In our business, we strive to keep tenant turnover as low as possible.  We lose cash flow for every month an office space or warehouse space is vacant.

Plus, vacant spaces in commercial real estate cost money (utilities, taxes, insurance, overhead, etc.).  Not to mention, you have additional expenses in marketing vacant spaces.  Wouldn’t it be better to just keep your current customers happy so that there is no need for a vacant space?

Of course, sometimes, vacancies are inevitable.

Businesses expand, downsize and occasionally close.  If you can’t accommodate a tenant’s needs at lease expiration, a vacancy will happen.

But we have had countless prospects come to our business parks because, quite simply, they are unhappy with their current landlord.

So, the main question is: How do you keep your customers happy?

To illustrate some of the things we do, allow us to tell you a story of a transaction that took place.

Recently, we completed an expansion with one of our existing tenants.

The regional manager in charge of the real estate transaction was repeatedly thanking us for being so helpful throughout the entire process and kept complimenting us on how smooth of a transition we made their expansion (which included quite a bit of construction in a different building).

What did we do that was so exemplary?

We constantly followed up to give status updates.  Whenever a question came up in construction, we promptly asked our customer for guidance so as not to delay their move-in.  We asked if they were happy with the progress and the work being done.

We answered any questions our customer had as quickly as we could.  We offered to have our janitorial service clean up after the construction crews were out of the office and warehouse.

In other words, there was no single thing that we did that made someone say “Wow!”

We treated our customer the right way and tried to go the extra mile.

Did the lease say we had to have a janitorial service clean up after the construction?  No.  But that was a minimal expense and our customer will definitely remember it.

In fact, the regional manager asked us if we had any property in our neighboring state, as they have a store relocation coming up in that area.

Not only did we secure repeat business from one of our existing tenants, but we might have secured a future deal.

And all of that came from keeping our customer happy.

This expansion story is just one example of how we strive to keep our tenants happy.

We also make a point to address maintenance issues promptly.  After all, summers in Gulfport, Mississippi get quite hot, and nobody wants to sit in their office when the A/C is not working.

Meet with your customers and ask them for suggestions.

Be proactive.

Make sure everything is okay with your tenant’s space needs.

Thank your customers for their business (maybe even a holiday card or gift basket).

Conclusion:

Keeping your customers happy is an ongoing process. 

Don’t think that you can send a gift basket when a new tenant first moves in and forget about them until the lease renewal.

Being a good landlord means focusing on your existing clientele throughout the lease term and not just looking for the next deal after you sign a lease.

Use common sense.

Welcome feedback.

Be proactive.

Put yourself in your customer’s shoes.

Keep your customers happy!  J

Please feel free to leave comments.  We promise to read them all.  You can also email us with any questions/comments at leasing@seawaybusinesspark.com.  As a reminder, we provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  For more information, visit our website at www.seawaybusinesspark.com or call us at (228) 575-7731.

How To Avoid SURPRISES At Your New Commercial Real Estate Space

Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net.

Picture this:

You just went through the entire relocation process for you new commercial real estate space and did everything you were supposed to do.

Start the process one year in advance of your lease expiration?  Check.

Do your market research?  Check.

Tour several different spaces within your target market?  Check.

Submit offers on a couple of your top choices?  Check.

Once you got the best possible deal for pricing and lease term, you negotiated your lease agreement.  At last, you just moved into your new space.

Fast forward one month. 

It just rained every single day for one straight week.  You operate a retail business in a strip center, and the parking lot is flooded.  People do not want to use half the parking lot because it is under a couple inches of water.  Frustrated by this inconvenience, several of your customers never enter your store.

You may not have any rights under your lease agreement either.  While parking in 2 inches of water is certainly an inconvenience that might drive customers away (no pun intended), it does not prohibit someone from parking and entering your store. 

Sounds like a bad situation, right?

What can be even more frustrating is that you could have avoided this by performing some unconventional due diligence.  And no, we are not suggesting that you analyze engineering plans or site elevations to determine whether the parking lot is going to flood.

All you needed to do to avoid flooding fiasco would have been to drive by your new commercial real estate space several times! 

Drive to the space and surrounding area in the morning during rush hour.  Go there during people’s lunch breaks.  Check it out during the evening when everyone is on the way home.  And make sure you go during inclement weather.

All tenants should drive by their future space – not just those involved in retail.

Flooding can be just as big of a deal for office and industrial tenants as well.  Employees, just like customers, do not want to walk through giant puddles to get into their space.  Shoes/clothes get ruined, it makes the floor slippery which is a slip hazard and liability, trucks may be prevented from making deliveries/pickups, etc.

And flooding is just one example of a problem that could arise if you only visit your commercial real estate once or twice before signing a lease.  Other problems include traffic congestion, noise levels, smog (in certain areas), neighboring tenants taking up lots of parking at certain times of the day, the list literally goes on and on.

Also, mix it up on the actual days that you visit.  Make sure you do not always go on a Wednesday, for example.  Here’s why:

We heard a story of a tenant in a downtown retail shopping area in a small town.  During the warm weather months (and this was in Florida so pretty much every month except December, January and February), there was a farmer’s market from 3:00-5:00.

People were not allowed to park on the street because it was sectioned off for people walking around the farmer’s market.  Customers would have to park in a garage several blocks away in order to visit the store.

Guess what?

Fridays afternoons were never busy.

And Friday was an important day for this tenant and losing out on this business was devastating.

Unfortunately, there was nothing they could do about it.

Again, this situation could have been avoided had the tenant driven around the potential space several times before signing a lease (especially on a Friday if that was a key day for their business).

A quick ride to your future space will paint a picture of what you can expect at any time of the day and from any situation. 

What do you have to lose? 

Worst case – you just confirmed that you selected a great space with no surprise issues. 

Best case – you discovered a “hidden issue” with your new space.  You can now either use this as leverage in your negotiations or find a new location.

Conclusion

There are several items of due diligence you should perform before signing a lease agreement for your new office space or warehouse space.  Most of the time, you can perform the due diligence from the comfort of your own desk.  You can make phone calls, read reports, negotiate a lease, etc.  However, some items require you to get in your car and drive by your space.

You might be asking yourself, how likely is it that my location will flood?  And if it does flood, what is the big deal if it is only once a year? 

Trust us, that one day that it floods will be the worst possible day it could have been. 

It will always fall on a day that you had your annual sale, meeting with a big client, when you were in a huge hurry, etc.

We sincerely hope you are enjoying our blog posts.  We welcome any and all questions and comments.  If you are looking for commercial real estate space in southern Mississippi, please give us a call at (228) 575-7731, email us at leasing@seawaybusinesspark.com or visit our website at www.seawaybusinesspark.com.

5 Questions You Should Ask Your Landlord Before You Sign a Lease

5 Questions You Should Ask Your Landlord Before You Sign a Lease

Touring office space and warehouse space is no easy task.  You probably only search for space when your lease is about to expire, which might be anywhere from once a year to once every ten years.  You are inherently at a disadvantage to your landlord, who does this for a living and might negotiate several lease agreements each month.

Wouldn't it be nice to have a list of questions that you need to ask every landlord?

As a landlord of commercial office space and industrial space, we have heard every type of question from prospective tenants.  Some questions catch us by surprise (“Can we paint the warehouse floor bright yellow?”) and some questions are to be expected (“What is the average monthly power bill?”). 

By no means could we provide an exhaustive list of every question you should ask. What follows is a list of 5 questions you must ask your prospective landlord to put yourself in a better position to make the best decision for your office space or warehouse space needs.  Just remember, there are no stupid questions.  If it is important for you to know the answer as a tenant, it should be important for your landlord to give a response.

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     1.  Other than monthly rent, what additional charges can we expect?

You would be surprised with how many people do not ask this question.  As responsible landlords, we always reveal what additional charges there are before a lease is signed (even when not asked and even though such charges are covered in our lease).  However, before you can make an intelligent decision about an office space or warehouse space to rent, you need to have an accurate view of your additional expenses.

For example, Office Space A is advertised as $2,000/month which is inclusive of all utilities and internet.  Office Space B is advertised as $1,750/month but does not include anything other than the space itself.  If you don’t ask what additional charges you can expect to incur, you may be surprised by bills you have to pay for like internet, groundskeeping, water/sewer, waste disposal, power, etc.  A space advertised for less might end up costing more once you add in all the extra expenses.  You should probably create some sort of spreadsheet that itemizes the different charges so you know what your total monthly expense will be.

     2.  May we see a copy of your standard lease agreement?

Before you get too far into discussions and spend too much time negotiating back and forth, you should ask for a blank copy of a lease agreement.

Picture this scenario: You negotiate back and forth with your prospective landlord on the price and term of the lease.  Other items are discussed, such as property taxes and insurance.  The landlord tells you that the tenant is not responsible for property taxes or property insurance.  Several months pass and at last, you have reached a verbal agreement with your landlord.  And just in time, because your existing lease expires in 30 days.  Then, you get the lease form for signature.  Surprise!  Property taxes and property insurance are passed through to the tenant in the form of additional rent.  The landlord clarifies what was meant - the landlord pays the original bills in a lump sum and the tenant pays one-twelfth of the bills each month on top of the monthly base rent.  The landlord "thought" the tenant meant whether the tenant paid the actual property tax bill and was responsible for finding an insurance policy.  You formulated budgets based on a significantly lower monthly rent and cannot justify this additional expense for your business.  Meanwhile, you now have 30 days to move out of your existing space and find a different space to lease.  What now?!

This situation is not all that uncommon.  We have heard stories (more like nightmares) from our tenants about similar experiences with former landlords.  Thus, you should always ask for a copy of the standard lease agreement early in your negotiations.

And we think it is understood that you actually need to read the lease agreement.  And we mean every word of every paragraph in every section.  Landlords are sophisticated parties and each word of each provision is in the lease for a reason.  If you do not understand what something means, ASK!  And if the landlord is of no help, you might need to retain representation, whether it be an attorney or real estate professional.  Remember, your lease agreement is what will govern the relationship between you, as the tenant, and your landlord.  So if the landlord told you something that is not reflected in the lease, you need to address it before you sign.

     3.  May we take pictures of the spaces we tour?

Ask if you can take pictures of the office spaces or warehouse spaces you tour.  Not all landlords will allow you to take pictures (for various reasons).  We typically allow our prospective tenants to take as many pictures as they want (as long as we are not in the picture!).  Typically a prospective tenant only sends a representative to tour the space.  Pictures allow everyone in the office to review and brainstorm. 

And you never know what you might spot when reviewing the pictures.  People often wear blinders when they are touring a space that they have instantly fallen in love with.  Pictures allow you to take a step back and review them a day later, week later, month later, etc.  The pictures may show spots in the carpet you did not notice, stains in the ceiling tiles indicating a leak of some sort, you name it.  Not to mention, you will be able to do better space planning if you have pictures that show where electrical outlets, doors, windows, etc. are located.

     4.  How long has this space been vacant?

This question might give you some leverage in negotiations.  A landlord might be unwilling to budge on the monthly rent if a property is fresh on the market.  However, an office space or warehouse space that has been vacant for several months (or years for that matter) might go for less than the asking price.  Landlords like to keep spaces occupied because vacancies cost them money.  You might be able to squeeze out a better deal with this knowledge.

     5.  What is the process for repairs?

This is a bit of a loaded question.  First, it depends on whether the tenant or landlord is responsible for the cost of the repair.  Second, even if the tenant is responsible for the cost, the landlord might be responsible for performing the repair.  For the purpose of this question, let’s assume it is the landlord who is responsible for the cost and performing the repair for the HVAC system.  Your A/C or heat stopped working, (and trust us, the HVAC issues always happen in the hottest or coldest part of the year) and you call your landlord to notify them of the issue.

Does a form need to be submitted?  Does someone have to come take a look before making a call to a repairman?  How long until a representative is able to look at the problem?  How long until you, as the tenant, can call a repairman and bill it back to the landlord?  Basically, these questions all boil down to “How long until the HVAC is fixed!?”

Find out about the process for repairs.  While the lease will likely detail who is responsible for a repair, it will probably only give you a timeframe for how soon a repair must be accomplished if the landlord is responsible.  And when it is 90 degrees outside and your A/C stopped working, you want it fixed ASAP!

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This is by no means an exhaustive list of questions that should be asked.  Every space in each location is different.  Different properties demand different questions.  One property by a railroad track might spur (pardon the pun) a question as to how often the trains run.  You might need to ask about noise levels near a manufacturing facility, fumes near a chemical plant, traffic near a major highway or flooding in a coastal area.  The list literally goes on and on.

As landlords, we would much rather a prospective tenant ask us one hundred questions than zero.  It shows that you are serious as a prospect and that you have done your homework.  We also like our tenants to know what to expect so that there are no surprises after a lease has been signed.  And like we mentioned in the beginning, there are no stupid questions.  If you think a question is important, we want to answer it for you and your landlord should too.

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Please feel free to leave comments.  We promise to read them all.  You can also email us with any questions/comments at leasing@seawaybusinesspark.com or visit our website at www.seawaybusinesspark.com.  We provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  Please keep us in mind if you are looking for a space in our area.

Think Outside the Box to Succeed in #CRE

Think Outside the Box to Succeed in #CRE

Image courtesy of Master isolated images at FreeDigitalPhotos.net

Thinking outside the box is a crucial skill for any #CRE professional.  This holds true for landlords, tenants and brokers alike.  There is not a playbook for every situation.  Sometimes, it pays to attack a real estate deal from a different angle.  And at times, all that is required is one crucial skill: listening.

Let us give an example.  In late 2013, our office received a call from a prospect looking for office space.  They had outgrown their space and were looking to expand their footprint by about 20-30%.

The main problem (for us and other landlords alike) was their existing landlord was giving them a pretty sweet deal.  The landlord was allowing them to extend their lease on an annual basis and was not increasing the rent.  They were even allowed to cancel the lease at any time, giving them no immediate incentive to move out because if they found a new location in the middle of their term, they could give notice to vacate.  Their rent had not increased since they moved in several years before.  Thus, the tenant was anchored in their thinking that the rental rate was comparable to the rest of the market (it was not).  They also felt that because they only needed 20-30% more space, their rental rate should likewise increase by about 20-30%.

                      

Like we said, this tenant was getting a really sweet deal and was not going to be rushed into signing a new lease agreement.

When this prospect first contacted us, we had an office space that had just become available.  The space was a little bit larger than they required.  However, trying to make the deal work to get started with a new tenant, we priced the office space so that the rental rate was comparable with some of our smaller spaces.  The prospect said, “Thanks, but no thanks.”  That price was way more than they were willing to pay.

This was also not a small tenant.  They had been in business in our local area for about 20 years and had an established, reputable business.  And they were not strapped for cash; in fact, they had plenty of cash reserves to move to any office space that they wanted.

After several months, we heard from this same prospect again.  The previous space we offered was leased at the time, and we had a smaller space available.  We went through the same ordeal.  We priced it aggressively and were told, once again, “Thanks, but no thanks.”

Another six months passed by, and wouldn’t you know it, we heard from the prospect a third time!  At this point, the business owner realized that their current rent was a good deal but they were still unwilling to pay much more than their current rental rate.  We told them our vacancy and applicable rates.  “Thanks, but no thanks.”

                                                                                                               

This was very frustrating for our company.  We felt that we had done everything we could to make the deal work.  We had showed them a few vacancies over a 12 month period and priced each office space very aggressively.  Again, we wanted to get started with this new tenant because they were a good fit for our business park.  However, we could not come to an agreement.  We told ourselves: That’s just business; not every deal is going to work.

Then, one of the members of our team got creative.  We went through their space requirements.  This was not a tenant that needed any kind of fancy office or any type of storefront.  In fact, this was part of the reason that our office spaces were priced too high (our offices are in brick buildings and have a storefront look to them).  Rarely did customers come to the tenant’s office.  And the occasional customer that came by was not going to care what the outside (or inside for that matter) of any office space looked like.

We had an office/warehouse that pretty much met their office requirements exactly.  Sure, it was 50% office and 50% warehouse, but we thought it might work well for them because they could use the warehouse as storage and maximize use of the office space.  Our office called and proposed this scenario.  The business owner came out and fell in love with the space.  This was a cost-effective manner to get them into our business park because our office/warehouse space is commonly less per square foot than pure office space.  This was the ultimate win-win scenario.  And it all came from listening to the space requirements, the business type and clientele.

One month later, a new long term lease was signed.  The warehouse is being used as a break area and for file storage.  The office is being fully utilized and gave the tenant some room for growth.  Win-win.

You see, the tenant told us they wanted office space so we only thought about our office buildings.  We had to think outside to box and really listen to their space needs to come up with this solution.  Sure, this will not work for every tenant looking for office space (or even most tenants looking for office space).  Most tenants for office space need a presentable office for clients.  They want and need the brick and/or glass building.  But this tenant was able to go into an office/warehouse and solve all of their space needs at a rental rate that suited their needs.

Conclusion

Every situation does not have a script.  Most leases are pretty straightforward: Tenant needs office or warehouse space.  Landlord has office or warehouse space.  Tenant and landlord come to terms and sign a lease agreement.

However, not all transactions are cut and dry.  Sometimes, you must get away from your normal line of thinking.  We cannot provide a list of different items to be mindful of when thinking outside the box (after all, then it would not be thinking outside the box).  For the above example, it involved listening to our tenant’s wish list for space requirements and coming up with a unique idea.  If you get to a standstill or are unable to come to terms with your tenant or landlord, take a step back.  Try to attack the problem from different angles.  You might be surprised at what will work for both parties involved.

You can email us with any questions or comments at leasing@seawaybusinesspark.com.  As a reminder, we provide office space and office/warehouse space in Gulfport, Mississippi.  For more information, visit our website at www.seawaybusinesspark.com or call us at (228) 575-7731.