This is the second video of a 4-part series that Let it Fly Media is producing, giving you an inside look into the new tenants and to see why dynamic and innocative companies such as WeWork and BacklotCars are choosing lightwell Kansas City as their office space.
To download the video, click here.
By Tim Schaffer – President, Director of Brokerage Services
The arcane world of real estate leasing can be frustrating for tech firms focused on efficiency of process. Here are 6 tips on making the process more efficient with a better outcome.
1. Surety of the lease
A rapidly growing tech firm’s financials look very different than that of a more traditional business your landlord is used to working with. From the outset and before a lease is negotiated, communicate the company’s business plan and understand upfront what kind of surety is required by the landlord.
2. Term of lease
Companies that are growing quickly don’t know where they’ll be in five years (much less 10), so choosing a landlord with multiple buildings or a building large enough to grow incrementally over time is a good strategy. Negotiate rights of first refusal that correspond to your projected head counts and rights to sublease, should you grow out of the building or sell the company.
3. Look for plug and play opportunities
Plug and Play is move-in ready space with furniture already in place. These options are desirable because they reduce the need for capital for furniture and infrastructure. Many times, these options are a sublease with a short-term commitments, a bonus for fast-growing companies
4. Test your Assumptions
Bring key employees into the process with different perspectives and survey your employees to understand what is important to your team. Small things to you can be big things to your team.
5. Be aware of how your culture will change in a new space
It’s not unusual for tech companies to have a thriving culture in cramped quarters then lose energy unexpectedly in a larger environment. Having the right designer that understands workspace science, best practices and has experience with like-kind tech firms is essential to maintaining and enhancing culture.
6. Not every building is right for growth
Not every space is right for every company, even if you love the building and the location. Understanding your headcount and how many people you will be hiring over the initial term of your lease is critical to vetting out the right building for the company’s future. You may be able to put more seats in less space in one building over another, so look at rent cost per person, not just rent per square foot.
By Brent Peterson – Vice President, Director of Industrial Brokerage
In the past three years, developers have started 24 projects across the United States to convert former retail space into industrial warehousing, according to a recent analysis by CBRE.
The result will be the conversion of 7.9 million square feet of retail space into approximately 10.9 million square feet of new industrial space. The second figure is higher because often a developer will tear down some or all of the existing structures and build a more significant building on that dirt.
The trend of retail to warehouse shows no sign of slowing down, and makes sense for a handful of reasons, here are a few:
- More retail sales are happening on the internet. This means that retailers and third-party logistics providers like Amazon, UPS, and FedEx are finding they need more space to facilitate online orders. With that, more brick and mortar store closures are taking place, and as they say, timing is everything.
- The industry has opened itself up to the change. These types of conversions have gone from once unthinkable to highly attractive. In Kansas City, we have seen shuttered Big Box stores turn into everything from athletic facilities to distribution centers.
- Big Box retail space is far more available than distribution space. While the overall retail market is healthy, several well-known individual retailers have closed hundreds of stores. Those big boxes can be challenging to backfill with new tenants. In contrast, the industrial market, which includes warehouses as well as manufacturing space, is at a historic low.
- The location is naturally ideal. Old retail space is often found along major streets or highways, providing easy truck access. While many stores are left because their surrounding neighborhoods deteriorated, those locations are within an ideal distance of large populations for same-day or next-day delivery, which make them perfect last-mile distribution centers.
- Structurally, it makes sense. Standalone Big Box stores and malls can be a great fit for e-commerce distribution because they offer wide-open spaces; dock-high doors for loading and unloading; and reasonable ingress and egress for trucks.
Kansas City will continue to see this trend continue, in large part due to its existing infrastructure. From a logistics standpoint, the metro has a multitude of interstate miles coupled with reasonable traffic patterns for a city of our population size. We can expect to see blighted big box stores put to use in new ways across the city.
If you are interested in learning more or hearing about former big-box real estate options that could work for industrial purposes, I’d love to talk to you about it.