Articles About Commercial Real Estate
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Posted by: Becky S.
Working from home has many advantages: it beats the commute, it is good for the environment, it is a lot less expensive than renting an office, and it surely increases work productivity. But does it really?
Six months ago, David Pearson and his partner Lizzie Gariani decided not to renew their office lease in Redwood City, CA. They would save on the $1,500/month rent for the 700 square foot office they shared in Redwood City, CA.
“That office was bigger than what we needed” said David “but that’s all we could find when we signed the lease 3 years ago and we got lured by a below market deal”.
Lizzie added: “The location downtown Redwood City was great, just about midpoint between my home and David’s, but I got tired of the half an hour commute twice a day.”
That’s why they let the lease expire and decided to work from home to save on rent, save on gas, and to gain on more productive time. The idea was to reinvest the 2 hours a day of lost commute time between the two of them into their product design business. Because they bill customers $110/hour, the opportunity cost was substantial.
“I really enjoyed our contribution to reducing bumper-to-bumper traffic on Highway 101, said Lizzie, and the flexibility to take more walks with the dog”,
But working at home came with a subtle price: friends would ask Lizzie to pick up kids from school and drive them to baseball practice more often than before. She had more time working out, more flexibility to run errands, but staying disciplined and focused on work was harder than she expected. In the end, her billable hours stayed about the same, “I cherish the flexibility, said Lizzie, but ironically the demands on my life seem to have increased”
David, on the other hand, did manage to increase his billable time, but it is not clear that moving his office home was the main driver. “I found myself crashing often in someone else’s conference room. Fortunately, I have friendly clients with extra space who did not mind.” David found the client’s office environment more stimulating than his home, although doing work unrelated to his gracious hosts, in their facility, could feel a bit awkward at times. He added: “I do need quiet private time for creative work, but I also crave for feedback anytime I come up with a breakthrough idea. It’s kind of a hard thing to do with the postman. I know, I tried!”
Has working from home been a successful experience for David and Lizzie? “Overall, it worked out fine said Lizzie, but it is limiting in some ways. I do not believe I could raise my business to the next level if I keep working from home”.
Six months later, both decided to go back to an office environment, but this time close to their respective homes. “We learned that we don’t need to share the same office to work collaboratively, which was one of our original concerns” said Lizzie “but we both came to realize that we are more productive outside of the home”.
David is now evaluation several co-working options, one of them hosted by Pacific Business Centers in its San Mateo location. Lizzie is evaluating an executive office with American Executive Center in Sunnyvale “It might be more expensive than a home office but I can get just the office I need… and with a month-to-month lease I can change my mind again anytime!
*The characters in this story are fictitious but inspired from reality. The story is a compilation of actual comment received by Pacific Business Centers’ personnel.
Kim Seipel is a Center Manager for Pacific Business Centers (PBC), the leading provider of On-demand and Virtual offices in Northern California. She helps Bay Area corporations, small businesses, and home-based entrepreneurs take advantage of the escalating demand for cost effective office space solutions. To learn more about Pacific Business Centers’ hosted office solutions, visit: http://www.PBCoffices.com .)
Last updated: 03.10.2009 03:13 PM
Posted by: Becky S.
Office space in the Bay Area/Sacramento and all around Northern California is a major overhead expense for any growing business, which makes the concept of shared office space appealing from a financial standpoint. There are many different forms of shared office space and each has its benefits and drawbacks.
The idea is to become educated on all the options available so that you can pursue a shared space environment suitable for your personal style and your business.
Co-working space
Co-working is a form of shared space where users, typically small entrepreneurs and free lancers, find each other often via informal networking and sublease space from a sublessor with similar interests, and share the cost of the office space. For example a medium size software development company in the electronic game industry may sublease space to other software developers that are a good cultural fit.
Pro: Good cultural fit by design and may provide for a stimulating work environment. Profit making is not the #1 motivation, which often makes co-working a low cost option.
Con: Sublessees are subject to change of heart by sublessors. Since revenue is not the main motivation, the process is inherently unreliable and the quality of service somewhat random. The match making process is typically not organized and can change on a dime.
The bottom line: Beware that the “beautiful bride doesn’t turn into the wicked witch!” To be safe, find co-working space through your own network and work with hosts that are unlikely to kick you out.
Executive Suites
Executive Suites offer private offices that can be rented on a month-to month basis with access to conference rooms, copying room, and often phone answering services. These spaces were traditionally successful for attorneys, CPA’s and other professional service firms.
Pros: Flexibility of terms, expansion and contraction, low upfront investment (possibly furniture), reliable
Cons: Disparity of service quality and building grade across operators.
The Bottom Line: Look for reputable operators who have been there for years. Do a Google search for “Executive Suite” in your town, bypass the listing sites and look for websites of direct providers in your area.
Office Business Centers and On-Demand Office Providers
Office Business Centers (OBCs) are the 21st Century evolution of Executive Suites. They often provide furnished offices “on-demand” in Class A and Class B commercial office buildings, VoIP telephony with all bells and whistles like Unified Messaging, and a series of additional services on a pay-per-use basis. They help project a stronger and more professional image of your business and cater to professional firms, startups, and corporate users that may have 1 to 20 employees. Sophisticated OBC operators leverage their economies of scale and purchasing power to pass on to the users a low total cost of ownership of a fully hosted “serviced office.”
Pros: Reliable, flexible for on-demand, expansion and contraction, no upfront investment, pay as you go
Cons: Sometimes hard to differentiate an Executive player from an OBC player
Bottom Line: Google Search for “On-demand offices” in your desired location, avoid listing sites, and select an operator with a local portfolio of multiple locations and preferably one that belongs to a large network of OBC’s like Alliance Business Centers Network (ABCN) with 650 locations worldwide.
Virtual Offices
Virtual offices, or part-time offices allow you to enjoy the bells and whistles of a full-time space such as a professional business address, answering services, and access to offices and conference rooms, without the commitment and overhead of actually renting the space itself.
Pros: Your business projects as established and credible, and you enjoy technology services comparable to what large companies utilize.
Cons: Restrictions on services such as only being able to utilize the facility during business hours, and a high volume of other companies using the same address.
The Bottom Line: Shop around and find a reputable service provider that offers flexible/easy terms and offers a virtual package that makes sense for your business.
In addition to weighing the benefits and drawbacks to these types of workplaces, remember to keep in mind that you’re sharing office space with other professionals that may be completely different from the field you’re in. If you’re looking for a very specific type of office setting, and want to have total control over who comes in and out of your space, then a shared environment may not be for you. The idea is to leverage the services a shared environment provides until your business is stable enough to afford its own infrastructure.
Kim Seipel is a Center Manager for Pacific Business Centers (PBC), the leading provider of On-demand and Virtual offices in Northern California. She helps Bay Area corporations, small businesses, and home-based entrepreneurs take advantage of the escalating demand for cost effective office space solutions. To learn more about Pacific Business Centers’ hosted office solutions, visit: http://www.PBCoffices.com .)
Last updated: 03.09.2009 03:52 PM
Posted by: Garrett K.
Nationally, the commercial real estate leasing market is struggling. There are less companies looking for space, and more companies defaulting on their leases. What does this mean to you as the small business? Below are some of your options:
- Executive Suites: The spaces typically range in size from a one person cube to a single office to space for four people. A small business pays a monthly rent and the Executive Suite operator provides the space, phone service, internet connectivity, printing services, phone, fax etc. You are typically allotted a certain amount and charged more depending on your needs. You have the opportunity to use their facilities world wide. These facilities are best for individuals who are not based near their companies office, true start ups looking for short term lease, and those looking for the added services of a large firm while operating on your own
- Shared Offices: These spaces are usually situations where a local company has too much space and needs to have an outside company move in. There needs to be good synergies between the companies for this to work. Some common examples would be lawyers and therapists sharing offices. What typically doesn't work is sales based companies and engineering based companies. Some amenities are typically shared but it is negotiated between the each company. These spaces are typically the most affordable and flexible. They are tough to find and do not work for many industries.
- Subleases: When a company no longer needs a location and has not defaulted on the lease, the company will attempt to sublease their space to another company. Subleases typically come furnished and wired for data and will be on the market for roughly 50-75% of the current market value for space. Sublandlords will expect a subtenant to take the space for the entire term of the lease and will rarely do any changes to the interior layout. When a sublease has less than 1 year remaining it value diminishes drastically. This is where the best deals can be found, but the landlord will negotiate the rent to current market rent at the conclusion of the sublease. These spaces provide the best deals in the market but can be hard to find the right one.
- Direct Space: These spaces are rented directly from the owner. Most direct leases are 3-5 years but certain owners will consider less lease term. Small businesses have the opportunity to work with an architect to design a space to their exact specifications and the cost of the build out is typically shared by the small business and the landlord. In times when vacancy is high (like now), the landlord will usually pay for all improvements within reason. The spaces are priced the current market and competitive buildings in the area. These spaces provide the ability to create a perfect space for your business, but it typically takes a more mature business or a flexible landlord to make the types of space work for a small business.
If you have any questions, please email sales@rofo.com
Last updated: 03.06.2009 04:34 PM
Posted by: Russell G.
Slowing economy or not, Towerstream Corp. CEO Jeff Thompson says he couldn’t be more pleased with his company’s performance over the last year.
Sure, the stock price for the Middletown-based fixed-wireless Internet provider sank by about 80 percent in the previous 12 months, hovering around 85 cents a share last week. Yes, the eight-year-old company has yet to turn a profit, eating through $3.22 million in the third quarter 2008 alone.
But Thompson has another number to highlight: $2.87 million in revenue in the third quarter, up 15 percent from the previous quarter, and up 63 percent from the year-ago period.
Although Towerstream hasn’t reported fourth quarter 2008 results, Thompson has already given guidance that sales should be up 10 percent over the previous quarter’s levels.
“If we continue to perform like we’ve been performing, everything else will take care of itself,” Thompson said last week.
To be sure, 2008 had its ups and downs for Towerstream, a business-to-business Internet provider that uses the WiMax technology, which can beam broadband wireless data over wider distances than WiFi and at faster rates.
The most obvious downer was the stock price, which went from a high of $3.23 a share in mid-January 2008 to a low of 68 cents in late December as investors cashed out of stocks in general. Normally, such a dismal price would lead to delisting from the Nasdaq stock exchange, but those rules have been suspended because many companies have experienced similar declines.
“To be at about 80 cents is not fun,” Thompson said. “But when you look at some of the best companies in the world trading below their book values, you can’t complain too much.”
At the same time, quarterly losses grew in early 2008 as the company added to its sales staff, inflating expenses and leading two analysts to downgrade Towerstream’s stock from “buy” to “hold.”
While one of two investment firms no longer covers Towerstream, the other, Canaccord Adams, reinstated the “buy” rating in November. A third firm, Think Equity-Panmure, also has a “buy” rating.
In spring 2008 the company failed in bidding for a piece of the 700-megahertz spectrum of frequencies being vacated by analog TV stations as they move to digital signals next month.
With telecommunications giants such as AT&T and Verizon vying for pieces of the spectrum because of the signal’s ability to travel long distances and to pass through thick walls, Towerstream was priced out of the auction held by the Federal Communications Commission.
“It got very expensive very quick, after everyone said it was going to be cheap,” Thompson said. “The opportunities were too few and far between.”
Still, the company continues to grow, both in the number of small- and medium-sized business customers and in the revenue it generates. Towerstream said last week that it has about 1,300 customers in nine urban markets – Newport, Providence, Boston, Chicago, Los Angeles, Miami, New York, San Francisco/Oakland and Seattle – up from about 900 customers a year ago.
Thompson is most excited about the revenue growth, which stood at $2.87 million in the third quarter, up from $1.77 million in same period a year earlier.
A lot of that growth can be attributed to Towerstream’s most popular product, an eight-megabits-per-second connection for $999 a month. It accounted for 40 percent of the revenue generated from new installations in 2008.
Thompson said the speed and price fill a gap that Towerstream’s main competitors – AT&T and Verizon – can’t fill because they only provide only 1.5-megabit service or a more costly 45-megabits speed.
Also, the company announced last month that in terms of EBITDA – earnings before interest, taxes, depreciation and amortization – its Chicago market has reached “profitability.”
Providence, Newport, Boston and New York – places where Towerstream’s service has been available the longest – have already reached that milestone under the EBITDA metric.
Towerstream won’t forecast publicly when the company will be in the black, but Thompson notes that it has a lot of cash – $28.09 million – to help it weather the effects of the economic downturn and the credit crunch.
“We’re very fortunate to have that cash, because anyone who needs capital is having a very difficult time right now,” Thompson said.
At this point, that cash cushion has come in handy. As Towerstream has ramped up its sales force from about 60 to nearly 100 in the last year, rising labor costs and other infrastructure expenses have widened losses.
The third-quarter loss of $3.22 million was up from $1.75 million a year before. But Thompson said the rate of “cash burn” that peaked in mid-2008 has declined.
“You have to build-out new markets,” he said. “You have to build a sales force and do the things you have to pay for upfront before the revenue’s there.”
Towerstream’s sales force performs the majority of its work in Middletown, where the company operates a sales center.
The thinking is that it is less expensive to have salespeople at the one location rather than in each of the market areas. And because of the nature of the business, that configuration has worked well, Thompson said.
Since the new salespeople started making calls, the quarterly growth has been in the double digits, according to the company’s financial statements.
“For most of the people who buy Internet access, phone or e-mail is the preferred way of communicating,” Thompson explained. “Having an analog sales force going around knocking on doors doesn’t seem to make sense for this type of technology.”
In some ways, the global economic woes have assisted Towerstream, keeping upstart competitors at bay because of the lack of financing available. Also, because Towerstream’s WiMax wireless technology is a cheaper alternative to cable and DSL Internet connections, Thompson said, the company often has either picked up new customers or retained a higher ratio of existing ones.
While WiMax is in wide use in countries such as India, Pakistan and South Korea, it is not common in the United States. Thompson said there have been recent developments that he believes will change that.
Two major players in WiMax – Sprint Nextel Corp. and Clearwire Corp. – have recently created a spin off company that is set to build a new mobile WiMax Internet network nationwide. At the same time, other companies including Intel, Google, Comcast and Time Warner Cable have agreed to invest in the technology.
Intel has said it plans to work with computer manufacturers to embed certain models of laptops with WiMax chips.
Towerstream is unconcerned about the merged WiMax company competing in the same markets, Thompson said, because Sprint Nextel and Clearwire have focused on providing the service to consumers rather than the business sector.
“We think it’s going to bring a lot more awareness to the WiMax technology,” Thompson said. “It’s going to go from being this new technology to it being embedded in devices you buy regardless if you asked for it or not. Kind of like WiFi now.” •
Last updated: 03.06.2009 04:33 PM
Posted by: Russell G.
Towerstream Presented with Two Telephony Innovation Awards at Telephony LIVE
Company Named as First Double Award Winner for its Wireless Broadband Service
MIDDLETOWN, R.I., October 2, 2008 -- Towerstream (NASDAQ:TWER), a leading fixed WiMAX service provider, today announced its WiMAX service has been named the winner of two Telephony Innovation Awards at Telephony LIVE 2008, a telecommunications summit from Telephony Magazine. The company was awarded “Most Innovative Broadband Wireless Service” and “Most Innovative Small Business Service.” Towerstream’s high-speed wireless broadband is currently available in nine major U.S. markets.
“Towerstream is dedicated to providing the best and most reliable wireless broadband service to businesses – from SMBs to enterprises,” said Jeff Thompson, President and CEO of Towerstream. “Telephony Magazine is a highly respected publication in the telecommunications industry and we are honored to receive these awards from the Telephony team.”
Telephony’s Innovation Awards are in their second year of recognizing creative service creation and deployment in the telecom service provider space. The awards are open to all service providers including telecom and cable companies, wireless service providers, managed and hosted service providers, Internet service providers and applications service providers. The awards are judged by members of Telephony’s editorial staff and by guest judges. This year’s guest judging panel included Daniel Briere, CEO of TeleChoice, Vince Vittore, program manager with the Yankee Group and Cindy Whelan, analyst with Current Analysis.
“Towerstream’s WiMAX service was the first double winner in the two-year history of the Telephony Innovation Awards,” said Telephony Editor-in-Chief Carol Wilson. “I think this speaks to how far ahead of the market our judges believe Towerstream to be in using this wireless technology to deliver broadband access to businesses.”
For more information please visit www.towerstream.com.
About Towerstream Corporation
Towerstream is a leading fixed WiMAX service provider in the U.S., delivering high-speed Internet access to businesses. Founded in 2000, the Company has established networks in nine markets including New York City, Boston, Los Angeles, Chicago, the San Francisco Bay Area, Miami, Seattle, Dallas-Fort Worth, and the greater Providence area where the Company is based. The Company was the first carrier selected to join the WiMAX Forum to assist leading vendors in establishing industry compliance with international broadband wireless access standards and cross-vendor interoperability.
Safe Harbor
Certain statements contained in this press release are “forward-looking statements” within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements are inherently subject to risks and uncertainties some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include, without limitation, the risks and uncertainties set forth from time to time in reports filed by the company with the Securities and Exchange Commission. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained herein. The company undertakes no obligation to publicly release statements made to reflect events or circumstances after the date hereof.
Last updated: 03.06.2009 04:32 PM
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