We want to buy songs not albums. Salesforce not software. Perpetual 1099 consultants over employees. Long term liquid investments.

We like the sound of flexibility because the world is unpredictable. But we’re also creatures of habit that like to minimize disruption and change.

Regus has been on to this for years. Office space without a long term lease commitment. It works. Because it’s the world we live in.

Sure, Regus caters to smaller space needs. The majority of their office suites are occupied by companies with 10 people or fewer in one location.

But guess what? Bigger users/companies want flexibility as well. And the landlord who dares to offer it is going to win. Here’s the reason why:

Large companies, even more so than small companies, do not want to move.

Offer a short term lease with renewal options and your building will always be filled with long term tenants.

$.34 per square foot. How the money is spent is very interesting and revealing.

We conducted a survey of commercial landlords with class A property and it was very interesting to see not only how much money was being spent annually but where it was being spent. This chart excludes brokerage commissions and tenant improvements which were tracked separately as transaction costs.

Even excluding commissions “Broker Marketing” is still where the majority of spending occurs. Examples include events like open houses, lunches, sporting events, and deal closing events.

The second largest category is “exposure/advertising”. This includes magazine advertising and sponsored business events.

“Other marketing” includes marketing and events for existing tenants.

“Promotional material” includes flyers, floor plans, and space plans.

Remember, this excludes commissions. Brokerage commissions is 2x the entire chart. And tenant improvements and build out is 16x.

Online listings marketing, CRE databases, and research was included in “Subscriptions & Associations”.

This market perspective was contributed by Michael Mazzotta.

I’m a commercial real estate broker and represent tenants in the San Diego Commercial Real Estate Market including Carlsbad, Chula Vista, College Area, Coronado, Del Mar Hts/Carmel Valley, Downtown, East County, Escondido, Governor Park, Kearny Mesa, La Jolla, MCAS Miramar, Mira Mesa/Miramar, Mission Gorge, Mission Valley, National City, North Beach Cities, North Central County, Oceanside, Old Town/S Arena/Pt Loma, Otay Mesa, Outlying SD County N, Outlying SD County S, Park East, PB/Rose Canyon/Morena, Poway, Rancho Bernardo, San Marcos, San Ysidro/Imperial Beach, Scripps Ranch, Sorrento Mesa, Sorrento Valley, Southeast San Diego, Torrey Pines, Uptown East, Uptown West/Park West, UTC, Vista submarkets.

Recent Leasing Trends

The San Diego market has been a very dynamic tenant and landlord market as of late. Rental rates have climbed back to where they were pre-recession inn 2006, 2007, 2008. Office markets such as La Jolla UTC, Sorrento Mesa, Sorrento Valley, and Rancho Bernardo have stabilized the most and are now fairly balanced markets putting landlords and tenants on equal footing.

What’s driving the market?

The leasing market in San Diego has improved greatly in the past 18 months. We are seeing more and more companies expanding their offices, and we have seen a great number of companies leasing multiple locations.

Two big things are driving growth: First is the general rebound of the overall local economy. Companies are beginning to invest again and grow headcount. We are seeing many more expansions and less “blend and extend” type deals. This is especially true in the technology sector. Technology start-ups have always fueled the excitement and demand of the San Diego markets and we will continue to see this trend continue. More and more start ups are attracted to San Diego due to it’s abundance of work/live environments throughout all of the submarkets.

Tenant advice and strategies

For San Diego County tenants that are looking to find space, I would suggest narrowing your search to buildings with 10,000 square feet or more. I would also focus on buildings that have historical vacancy to capture the best deal. These buildings also provide the ability to expand quickly without having to break a lease and relocate. Never forget to include in your lease a first right of refusal. And always put early occupancy and free rent inside the lease with landlords that want to see a higher contract rent. Securing the right lease and space goes far beyond just getting the lowest starting rent.

This market perspective was contributed by Michael Tucker of Scotland Wright Associates.

I’m a commercial real estate broker and represent tenants in the Greater Atlanta commercial real estate market – including – Buckhead, Midtown, Downtown, Central Perimeter, Alpharetta, N. Fulton, Gwinnett, Sugarloaf, Johns Creek, Decatur, Cumberland Galleria, Northside Dr./GA Tech, Chamblee, Kennesaw/Chastain Road, and Peachtree Corners.

State of the leasing market

The market is becoming more and more balanced, shifting from a pure tenant market to one that is equal for tenants and landlords; although we would still call it a tenant’s market. The landlords are starting to push rental rates in stable buildings and pull back on their concessions – especially the free rent and tenant improvements.

Marker drivers

The leasing market in Atlanta has improved greatly in the past 18 months. We are seeing more and more companies expanding their offices, and we have seen a great number of companies relocate to the Atlanta area. Two big things are driving the growth. First is the general rebound of the market and stable companies beginning to invest again and chose to grow their companies. We are seeing much more expansions and much less blend and extend type deals. Especially in the technology sector that is growing tremendously in Atlanta. The second is the State Farm effect. State Farm has leased over 1 million sf of office space in Atlanta in the past 12 months, causing many of the large blocks of space in the Central Perimeter to be leased up all at once.

Tenant advice and strategies

I would tell a tenant looking for a new location to focus on the fundamentals driving their decision and not to let the “tail wag the dog”. They need to determine what are the two or three things that are going to be the most important, and then avoid considering buildings that won’t be a good fit. For example, if a short lease term is the most important thing, then don’t look at spaces that need a ton of build out and be willing to be flexible on the sub-market they are considering. Another example would be if recruiting is a major initiative, then don’t stress over $0.50 per sf on rental rate, but instead focus on the building/landlord that can build and design the space you want to attract the type of employees you need to hire. When companies know what they want and how office space impacts their business, then they make far quicker and better long term decisions.

We’re excited to unveil a new (and easier way) for commercial real estate brokers, agents, property managers and landlords to present available listings on their own website.

The Rofo listings widget (please help us come up with a better name) is:

FREE
SCALABLE
FLEXIBLE
CUSTOMIZABLE

And it’s easy to use. It’s packed with functionality, easy on the eyes, simplifies data management, keeps you in control of your listings data, and leverages Rofo’s tools for lead capture and routing on any device!

The Google map is interactive, Yelp amenities (like parking and coffee shops) are integrated, and your website visitors never leave your site! Your listings and your traffic. If you have videos of your properties on Youtube they will be displayed. If you have attachments like floor plans, they will also be displayed.

Best of all, it’s one single line of software code. Your web developer will enjoy this. And you can place it on as many sites as you like.

Need to mention again that it’s free. Oh, and if you want/need to update other listings sites and brokers in your market, they can subscribe to your RSS or you can export to Excel and email the file.

Here’s a live widget to get a better sense of the experience:

1) Go to www.rofo.com and sign in.
2) Click on Profile Settings.
3) Once you’ve added your photo and description click Save Changes

Best practices:

Complete all fields and provide a brief description of your role/expertise. Be sure to include a profile photo. Your profile gets attached to your listings, activity, and all Rofo introductions. It personalizes the experience and creates more meaningful real estate connections.

I run a website that lists office space. So I end up seeing a lot of office space. One thing I know about San Francisco is that finding quality space in an amazing location that is move-in ready and at discount to market rents is very hard to come by.

I came across this space today (actually it came to my inbox). If we didn’t have our own nice below market space I’d be hopping on this one.

Here’s the description I received:

We are marketing that 4,052 square foot space for sublease. This is a great space with north-facing views. Furniture can be included. Current layout is 18 low-height work stations, 5 private offices and a kitchen/break room. This is a stand-alone, non-shared space; our client’s other space is on separate floors.

The remaining lease term is through May 2014. The asking rent is $39 per square foot per year, fully serviced, or about $13,000 per month – well below the landlord’s $50+ asking rent.

Floor plan and pics:

A very common question with a simple answer: between $500 and $1000 per person.

I know it doesn’t sound very scientific but this is based on renting spaces for Rofo for the last 5 years, 5 years as an office leasing broker, and reviewing thousands of lease comps over the years. I know too much about office space rents.

As with any expense in life, some will pay a little more and some will pay a little less. Some rents will include everything and some rents won’t include a thing besides the space.

And I realize office rents in New York City are not the same as Pittsburgh. That said, all markets offer a choice to tenants in terms of quality and price.

The more important question to ask is what you do in your space? We’re all doing some kind of work. The type of work will influence your choices and rent.

Here are some basic questions to ask (you and your colleagues):

Do you meet with customers?

If yes, then you want to be in a presentable space with easy access.

Do you drive to work or take public transit? Or both?

Typically, spaces near public transit mean higher parking costs.

Do you work normal business hours or round the clock?

If you’re a night owl you may want to consider a more secure space. That often means building security which means a fully serviced building with slightly higher rents.

Are you a sales team or are you an engineering team? Or both?

This dictates whether you need your own space, if you can share space, and whether or not you can get along in a open space or need private offices. The more a space is built out the more the rent (usually).

Does your business have a history?

If you’ve leased space before there’s a good chance this means you have some future visibility. It also means you have a little financial credit. Credit will influence the kind of deal you can negotiate and how much money you must sink into a deposit. The deposit is also a function of how much, if any, a landlord has to spend to get you into a space. The more it costs the higher the deposit. One month of rent or less is great. Anyone who asks for 3 or more months is being unreasonable (unless they are spending a bunch on improvements and commissions to get you in).

How do you know what is right for you and your business?

At the end of the day, your rent shouldn’t exceed 10% of your overall business expenses (that includes payroll). If it does, you may want to think about finding cheaper space.

Share your thoughts with us.