The bigger news is that the prime rate is at its lowest in 40 years, and it's a great time to refinance and re-evaluate lease and mortgage rates.
Consumers will buy and invest these days, but only if they can get quality at a bargain. This is especially true in corporate real estate. According to a Collier's International market report, Cleveland has weathered the economic storm with only moderate increases in vacancy rates in the second quarter of 2001.
That said, there is tenant downsizing and leasing activity is slow, partially because investors are unwilling to pay the prices owners are asking. And, although the increase in vacancy rates is moderate, the economic environment has opened up the discussion of lowering leasing terms.
"Landlords are becoming more creative in their efforts to renew existing tenants and to secure new tenants," says Tom Gustafson, vice president of Collier's International. "While asking rental rates are holding steady, concessions such as free rent and increased tenant improvement allowances are being offered more frequently and more liberally."
But a bargain isn't a bargain if you don't get what you need. The first step, according to Allen Wiant of the corporate real estate firm Brandon, Wiant, Converse, is to determine what you need.
"There is a strategy and a process," Wiant says. "It is a lot about organization."
Ask several key questions before you contemplate any real estate-related move or expansion, regardless of the terms. First, where does the majority of your work force live?
Generally, people don't like to travel more than 30 minutes each way to work. If you cross that line, your employees may vote with their feet. Gustafson predicts that because of that, many higher-paying service businesses will look at the Chagrin Highlands area as a relocation option.
"A lot of company and corporate executives live on the east side," he says. "That makes Chagrin Highland very valuable property."
Even if you're bargain hunting, the key word in real estate is still "location." There may be dozens of new methods of digital and satellite communication, but nothing beats a good face-to-face meeting. And it is no longer good enough to have a central location that is accessible by one major interstate or highway -- if you've ever been backed up in traffic on Route 422, this should come as no surprise.
"Not everything has to be right off the highway," says Wiant. "Employers are now trying to find a place that has multiple points of entry and alternative routes during rush hour."
Location is not only important when considering how far your employees and clients must travel, it is equally important when you consider what is around you. Gustafson believes that means more employers will move toward locations that offer more than just office space to make things convenient for employees.
"There is trend toward the multiuse retail and office space," he says. "We have a building that includes daycare, fitness and a caf. That way, your employees don't have to leave the area."
Wiant adds one more consideration -- the environment. He believes the businesses around you can have a lot of synergy with what you are doing.
"Take into consideration who your neighbors are," he says. "It can be both positive and negative. If you are in a creative business, you want to be somewhere with high growth and excitement, where business is happening all around you." How to reach: Brandon, Wiant, Converse, (216) 574-4200 or www.bwcltd.com; Colliers International, (216) 861-7200 or www.colliers.com
Kim Palmer (firstname.lastname@example.org) is managing editor of SBN Magazine.