In a bull market for business growth, who has time to find a larger location to accommodate a larger staff? Your focus is on business growth, not business location.
For Bob Fisher, president and CEO of FORESIGHT Corp., the solution came in using a tenant representative when he needed to move his rapidly growing 10-year-old e-commerce business. The best part: Using a tenant rep didn’t cost him a thing.
FORESIGHT started in a 1,250-square-foot location and later moved to one measuring 5,600 square feet. When it was time to move again, Fisher decided to use a tenant rep to find his current Dublin location, which he moved to in April 1999.
“We were packed in like sardines,” says Fisher of the company’s previous place.
His tenant rep, Greg Schenk, found the 9,500-square-foot location that includes a right of first refusal for additional space that could allow the business to grow to about 18,000 square feet without having to move again. That’s important, since Fisher says he will double his staff of 40 employees by this time next year.
After Fisher started talking to prospective landlords, he was contacted by Schenk, president and founder of the Schenk Co. Inc., a firm that represents tenants in search of office space. Schenk can also negotiate contracts and help coordinate moves.
“He accelerated us in learning the [office space] market,” Fisher says, adding that Schenk explained what to look for, such as growth space, meeting room space, space development and rights of first refusal on additional space — items that otherwise would have become add-ons to an original lease agreement.
Schenk urges caution for anyone looking at lease rates, no matter the location. Most new buildings quote a base rental rate and an operating expense called net charges, which include taxes, utilities, insurance and maintenance.
Lease prices depend on location, length of contract and age of the project. Landlords look at tenant credit, lease length, square footage being considered and what kind of improvements the client says are needed to make the space workable, Schenk says.
“Most clients we work with are looking to pay $16 to $18 [per square foot], everything included,” he says.
As for his own fees, Schenk says he’s paid “the normal 3 to 4 percent of gross rental proceeds on the terms of the lease. The prospective tenant is not paying any out-of-pocket costs.
“The only time a tenant pays money to us is if they don’t do anything. If we looked for six months and they decided not to move, then they would pay us a consultant fee.”
As a tenant representative, Schenk works closely with key management. An initial meeting requires management to define its needs, including whether the company wants to buy or build, and what the budget is.
“Sometimes we’ll bring in a space planner to help them identify what they need,” Schenk says. “Sometimes they don’t have a clue. They think they’ll hire 20 people but don’t realize the amount of space needed for that. We’ll try to find out what space they need and what’s special about that space, such as a lunchroom, a boardroom, a warehouse needing docks, a small workout area with showers, or power [electrical] needs.”
After coordinating one move and working with a tenant rep on the most recent one, Fisher says a good tenant rep becomes a valuable partner.
“It’s pretty painless to use a tenant rep,” he says.
How to reach: The Schenk Co. Inc., www.irepthetenant.com; FORESIGHT Corp., www.foresightcorp.com
Andria Segedy ([email protected]) is a free-lance writer for SBN.
