Articles About Commercial Real Estate

Early Stage Essentials for Start ups

Posted by: Chris Z.

Early Stage Essentials: Start Up Access

All early stage companies that find success quickly identify their place in the market and build a solid foundation for growth.  Young companies have a series of issues to tackle right out the gate which determine how stable the company will be and its potential for growth like identifying the right office space and leasing arrangements, finding service providers to build out adequate infrastructure and other essential items that are not part of product development or initial go to market strategies.  

It is also critical to have a solid support team to make sure you are accomplishing all of the tasks needed to progress your company through the milestones needed to achieve your goals.  The time that elapses from developing a new idea to taking it to market is so critical to maximize for young companies because a falter along the way will give your competition the necessary time to overcome any lead time you may have had.  It is essential for start-ups to leverage the host of tools online and service providers in their local area to focus their time and energy on bringing in revenue and developing relationships with new customers.

At Access Growth LLC we focus on a core set of business basics in our Start Up Access program.  This program is designed to assist early stage companies get the venture on track to successfully raise capital, quickly develop the product or service, and build the relationships necessary to rapidly deploy and begin generating revenue.  Below is an overview of the items we cover in our standard Start Up Access program that can be used as a check list to make sure you are not forgetting an important aspect of company development in the earliest stages.

Basic Growth Evaluation
IP Planning Evaluation
Business Concept Graphic
Basic Marketing and Sales Plan
Basic Financial Forecast
Basic Product Development Plan
Basic Operations and Technical Infrastructure Plan
Executive Summary with Funding Requirements
Overview Presentation with Tactical Go-to-Market Strategy
 

Last updated: 10.29.2008 02:51 PM

The Landlord's View

Posted by: Alan Bernier

The Landlords View
(or the 5 questions landlords will asks about you)

1. What is the credit of the company I am signing a lease with?
Most landlords have loans in place, and at times, their lender will
ask to approve a lease before it is signed since they are technically
part owners. If a landlord wants to refinance a building, a large part
of the valuation of the building will depend on the building’s rental
stream and the likelihood of the rental stream continuing (e.g. your
financial picture and credit history). Some landlords will not be comfortable
leasing spaces to start-up companies because of this credit risk.

2. How much do I have to spend to get them to start paying rent?
The issue here is what kind of concessions the landlord is willing to give you,
the tenant. These include custom tenant improvement, build-outs, free rent, and
commissions paid to brokers involved in the transaction. The more a landlord must
pay to start his rental stream, the more scrutiny he will use in analyzing your
company as a potential tenant.

3. What security do I have if this company defaults?
In most cases, your security deposit is the landlord’s easiest collateral access. 
Theoretically, they can get in line with the other company debtors attempting to
collect some of your business during liquidation, but this time investment is rarely
made by a landlord. If you are unlucky enough to have personally guaranteed the lease,
the landlord might pursue you personally to cover the remaining lease obligation or at
least the marketing time and cost for procuring a new tenant.

4. How long will I have to wait for another (better) tenant to come along?
During the negotiation process or when you are potentially behind on your rent, the landlord
will consider this argument. If the market is doing well and there is allot of demand for space,
your ability to negotiate will be decreased because the landlord will have a rough idea of how
long it will take to find a higher quality tenant. If the market is weak, then you will have a
lot more leeway to negotiate and can use this argument as part of the negotiation process.

5. What is their use and how will that affect the building?
If a company is cramming 15 people into 1,000 square feet, these people are having an adverse effect
on the buildings systems and building community. For example, a school that leases space will have a
few hundred students using the lobby, parking lots, and bathrooms when a normal office user might have
30 full time users affecting the building. A landlord will think carefully about your use, your clientele,
the type of consumer who comes to visit, and how that will affect the other tenants in the building and the
building’s value.

 

Last updated: 10.20.2008 03:01 PM

Common Lease Business Terms

Posted by: Alan Bernier

Term sheets are used to establish the basic business terms of a commercial lease. It's common practice to establish the business terms prior to negotiating a commercial lease (which is a legally binding document).

Following are the common business terms addressed in a term sheet:

PREMISES:     This typically defines the location, size and address of the space you are leasing

TERM:     This defines the length of the lease and the approximate date that the lease commences

RENTAL RATE:     Defines the initial lease rate and any increases (typically annual). This is also the place to define the type of rent (fully serviced, industrial gross, triple net).

TENANT
IMPROVEMENTS:     This term establishes how the space will be delivered, who will perform the work (if any) and the amount it will cost.  Several factors influence this term: the condition of the space, the desired improvements, the length of term, the lease rate, the business's credit and the overall market conditions.

RIGHT TO TERMINATE:     Depending on the length of the lease term a landlord may consider an early termination.  
However an early termination usually involves a fee paid by the tenant equal to unamortized costs and some number of months penalty.  For a growing business having this flexibility is often worth the termination fee.
 

OPERATING EXPENSES:     This term addresses operating expenses associated with the building.  Tenants are typically responsible for their percentage share and the annual increases. This term will vary based on the type of lease (i.e. fully serviced, triple net, industrial gross.

SECURITY DEPOSIT:     Security deposit is a function of the market, the transaction costs (i.e. tenant improvements) and   the tenant's financials. 

RENEWAL OPTION:    Sets the terms for a lease renewal at the end of the lease term. 

RIGHT OF 
FIRST OFFER:    This a favorable to a tenant and often wanted by a growing business to ensure expansion options in the future.  This term dictates that a landlord has to approach you first to make an offer on new availabilities (usually adjacent to your premises).
   
SIGNAGE:     Establishes the kind of signage you get (lobby, directory, monument, building, etc) as a tenant and who pays for it.  Larger tenants usually have more signage opportunities.

PARKING:     If any, this term establishes the amount of parking you are entitled to and how much it costs. Parking agreements are usually separate from the lease agreement.

ACCESS:     Determines the amount of access you have to the building and your space. It should always be 24/7.

SECURITY:  Defines any building security (alarms, card key access, security personnel).
 

Last updated: 10.20.2008 02:59 PM

Q4 2008 StreetBeat Market Update Newsletter for SF Commercial Tenants

Posted by: Paul P.

This newsletter can be found under the "Articles" tab at this URL - http://sfcommercial.com/paul-l.-picciani.html.  Call me at 415-834-3542 if you'd like to further discuss the current office leasing market for San Francisco tenants, which landlords are/are not flexible on rent & terms, and key items & timelines a prospective SF office tenant should keep in mind prior to starting a search process.

Last updated: 10.19.2008 02:59 PM

So you think you need a new computer??? Maybe not...

Posted by: Liza L.

Times are tough right now and every penny counts. Yet that old computer is SO slow you're wasting valuable time just sitting there waiting for it.  What to do???

An audit of your computing needs and existing equipment could save you hundreds of dollars (or any other currency). Here are some examples.

Say you're a MicroSoft Windows user (ah, my heart goes out to you, poor thing, but only because I am in the same boat...). Did you know that Uncle Billie's company keeps enlarging your operating system so pretty soon you're out of memory? Your machine gets slower and

slower and pretty soon it just won't run your favorite program at all. You could go out and buy a new computer but then, that one may not run your favorite old program for different reasons. It may be easier on your brain and your pocketbook to see if you can add more memory to your existing machine. If so, you can let your now bloated Windows software use most of the new memory and get your former functionality back. The cost will be much lower and you will not have to learn a whole new set of keystrokes to do exactly what you were doing before.

Neat, huh?

 

Last updated: 10.17.2008 05:59 PM