How to Get the Best Bang for Your Buck When Renting Commercial Real Estate

How to Get the Best Bang for Your Buck When Renting Commercial Real Estate

Winter is Here.

Winter

When it comes to renting Commercial Real Estate, it’s safe to say we know a thing or two.

2018 is nearly upon us, that means we are in the middle of prime moving season. For commercial and residential alike.

Moving during winter is advantageous from a financial and customer service viewpoint. On top of getting more personal attention from leasing agents, you can also find yourself in the position to get some good deals.

That is, as long as you are ready to pull the trigger.

How to save a few bucks when renting

As with most negotiations, if you play your cards right you can save a substantial amount of money renting real estate.

Here are some professional tips:

  • Know your number – Arrive to a showing appointment knowing how much you can spend on a space. Never start negotiations without a number in your mind.
  • Know your agent/landlord – You want to work with someone who has been a part of the team for a long time. Those are the ones that can give you a deal since they know their way around the business. If you get the vibe that you need someone more experienced, there is no shame in asking for exactly that.
  • Referrals – Tell them how you found them. Most companies will have some sort of kickback to you and whomever got you interested in the space.
  • A penny saved is a penny earned – Do not underestimate small savings. Fifty bucks here, seventy-five there, it all adds up. For example:
    • Application Fee: $50 If you seem like a serious client, most companies will consider waiving this.
    • Free Week: Offer to move in around the 20th. You may find them willing to allow you to start moving in but start paying in the new month. Potential to be moved in and operational before you are paying rent. This can be hundreds if not thousands of dollars saved.
    • Ask if there are any “B-Level” units: Maybe there are more puddles in that part of the parking lot, the view is of a railroad or neighboring building, the electrical room is nearby, etc. If you are willing to compromise on small things, they may have a space that is otherwise identical for significantly cheaper. This could be result in thousands of dollars saved a year.
  • Know the company – Coming across as knowledgeable about the company you are negotiating with can go a long ways. It shows you are dedicated to getting a space if you put the time in researching.
  • Make. An. Appointment. – This is less a stickler for us than other companies. Regardless, to ensure you get the best experience from the most capable leasing agent, make an appointment. Also, it is the polite thing to do.

Finally, if the price is right and the unit works for your business needs. Be ready to negotiate. Remember, while a company may own the space, you are negotiating with a person. They likely have a number too and 80% of something is better than 100% of nothing when a unit is vacant for another month.

Plemmons Pro Tip: That works at hotels too. Past the usual check in times you can usually find a manager that will rent vacant rooms for a discounted rate rather than letting them by empty for the night.

Don’t say Plemmons Industries never did nothing for ya!

Jamming in the Workplace – Office Music

Jamming in the Workplace – Office Music

Office Music Helps Productivity, Creativity, and Atmosphere

Music helps you work. This is not a new concept.

Working with music dates back to the earliest days of recorded history.

Studies over the last century have shown music to be especially beneficial in an office environment.

EQWe added music to our offices. Why?Atmosphere. 

It does wonders for employees as well as clients.

Have you ever walked into a building and the only noise you can hear is the gentle whirl of the HVAC system? It is… unsettling to say the least.

Music to break the silence keeps the feelings warm and personable. Jamming in the office helps employees break up the monotony of their days.

Does your office have music? Or is the soundtrack to your day a co-worker typing away?

Merry Christmas From the Plemmons Family!

It’s that time of year. Drinking eggnog is socially acceptable!

Oh! And it’s Christmas! 

Christmas Tree

Or shortly after and we’re not back yet! Either way.

Christmas and holidays in general mean a ton to us here at Plemmons. Just look at our office. 

Christmas Tree
Seriously, we have a tree in Jim’s office.

To us, it’s a time for joy. To spend time with our families and remember how lucky we are.

“I will honor Christmas in my heart, and try to keep it all the year.” – Charles Dickens

Merry Christmas!

From all of us here in the Plemmons Industries family! 

3 Simple Ways to Solve Seattle’s Rental Crisis

3 Simple Ways to Solve Seattle’s Rental Crisis

Seattle’s rental crisis cannot be solved with rental caps. 

Acting as such will only make the situation worse.

Seattle

Real estate is a living market.

Simply demanding that it meet demand is not sufficient.

Instituting Rent Control and calling it a day will not solve Seattle’s rental crisis.

Only when zoning laws, availability, and smart rental regulations work in tandem can Seattle’s rental crisis be dealt with.

Fix restrictive zoning

Seattle “simplified” zoning laws in 2015. Multi-Family zoning now falls into one three categories. LR 1, 2, and 3 respectively. The main difference with regards to the rental crisis is the restrictions on the number of units by overall building square footage.

At best, new construction is only allowed at a single unit per 800 sq ft. With others having a limit of one unit per 1,200 sq ft.!

Unfortunately, this creates an awkward scenario where lack of supply increases demand but developers cannot build to meet all the demand even if it would make financial sense.

Simply put, Seattle must allow for increased density in construction to supply the studio and one-bedroom apartments required to solve the crisis.

The case for Rent Stabilization

If you recall from our first piece, Rent Stabilization is different from Rent Control as it doesn’t set the maximum price units can rent for rather, a maximum rate for yearly rent increases.

This rate is determined by inflation, local residential real estate market, and other economic factors.

In particular, Rent Stabilization has the massive benefit of reducing the financial risk for developers when it comes to building. Property Management companies can buy units doing their profit analysis on the value the units are worth on the open market.

This means the developer does not have to worry about Rent Control making certain building types unattractive for sale post-construction.

Developers can focus on creating supply to meet the demand of would-be renters instead of worrying about if those projects will be able to turn a profit based on Rent Control regulation.

Regulations must be enforced

Solving Seattle’s rental crisis requires smart decision making and a well-constructed plan.

Additionally, regulations must be well thought out, written to have maximum impact, and pragmatic in their wording and execution.

Poorly planned or toothless regulation will be like pouring gasoline on a raging fire.

The last thing Seattle needs is a situation like London or New York are currently in.

Reports of family members pretending a parent is alive when they actually passed away years ago are not uncommon. Hard to blame them when the rent on their parents place was $270 when the market value is over $2,000!

Now what?

The only way to get this crisis solved is to find solutions that make it profitable for developers and landlords to participate.

As well as, ensuring Seattle residents have safe and affordable rentals to call home.

Solving Seattle’s current rental crisis has no single solution. 

Specifically, easing zoning laws, implementing stabilization systems, and smart laws that take the human element and market into account will allow natural change to begin loosening the rental market.

Harmony between supply and demand will help every business in Seattle. When people have more money left in their pockets, businesses have more money in their tills.

Rent Control. An Overview, Analysis, and Potential Impact on Seattle.

 

Seattle is in a Rental Crisis

To sum up the Seattle rental market:

It is not pretty. 

With rising rents in the Seattle area, finding a one bedroom apartment now requires a take-home income in excess of $60,000.

Rapidly increasing rents, explosion of short-term rentals and developer discouraging building regulations are fueling a shortage of rentals that worsens each month.

Seattle City Council members have requested the 1980’s ban on Rent Control to be overturned in a letter written to Olympia.

While intended to solve a crisis, rent control by itself will not resolve the issue.

Rent Control. What is it?

MoneyThe concept of “Rent Control” relates to a system of laws that aim to keep housing affordable to keep the bargaining power between property owners and renters balanced.

Rent Control’s intended outcome is more to prevent rental rate gouging due to a competitive market.

In the most basic form, Rent Control laws will cap how much a landlord can increase the rent each year. This percentage is usually sourced from inflation rates. (“Rent Stabilization” is the technical term for this. For simplicity we throw it under the same umbrella.)

The other tool of Rent Control is simply capping the amount that a landlord can charge for rent.

The Best Intentions. The Worst Outcomes.

Rent Control legislation forcing units to rent below market value often leads to backlash from landlords and developers.

The incentive for landlords to invest in their existing units is severely diminished since their return on investment is no longer based on the market, it becomes tied to a fixed rate.

Developers are better served building single family homes and condominiums that can sell for the price set by the market rather than what Rent Control law says.

Additionally, Rent Control often forces developers to set aside a portion of the space in any proposed multi-family housing.

What About “Inclusionary Zoning or Social Housing?”

ApartmentsDepending on who you ask, this is the London or New York solution.

The idea is that for a developer to get their building project approved they agree that a portion of the units go to specific tenant types or rent below the market rate.

The rent for a London flat is $2,486/mo. Central London is well over $3,000/mo.

Landlords in New York often choose Rent Control unit tenants in comically corrupt ways. They are often rented to those with personal or business ties to landlords. Often, the tenants are far above any income maximums

What sounds like a perfect solution, has turned out to be better in theory.

Effect on Small Business & Possible Solutions

Empty WalletA general economic principal states that a fiscally responsible person or household should spend no more than 30% of their income on their rent or mortgage.

With this theory in mind, it is no wonder Seattle is supporting this principle. Yet, as seen in other cities the cost of living and citizens disposable income can fluctuate.

When push comes to shove, people are going to pay their rent before they go out to have a drink at the local bar.

Seattle’s rental crisis has no easy solution. However, we can say with certainty that Rent Control on its own will not be a silver bullet. Multiple factors play into the exponential cost of living increase in Seattle. The solution must also be a multi front approach. These solutions deserve thorough analysis and will have their own article.

The solution must go beyond real estate & small business.

Amazon’s Relationship With Seattle, Our Thoughts on What Happens Now.

Amazon’s Relationship With Seattle, Our Thoughts on What Happens Now.

It is no secret, Amazon’s HQ2 will be built somewhere in North America. Ultimately, the Seattle area will not be host to that new headquarters.

In our opinion, we are better off that way.

Labor market drought

Amazon has received over 230 proposals across the country because of its proven result of major job growth to that area. Thus resulting in an economic boom for that small area. However, small businesses will feel the available labor force drought almost immediately. Many industrial areas cannot sustain the personnel demands of Amazon as well as their own local businesses.

Amazon can support substantial wages, offers benefit packages, and stable employment, but generally, there are only a finite amount of people to fill the demands Amazon has.

Furthermore, the response “People will just move to the area,” has an entirely different problem.

The cost to live near Amazon

Take it from those near Seattle, when an area has a massive economic growth period real estate prices will keep pace.

The average cost of a home in Seattle is $730,000 as of writing this. Up 13.2 percent since last year. Well over double the national average of 6.1 percent.

This can create a rather odd situation where Amazon’s own employees cannot afford to live in the city which they work.

As of Mid October, there were three condos available in Seattle under the $500,000 mark, in the entire city.

Our thoughts on the future

Amazon owns 16% of the office real estate space in Seattle. Their distribution centers are massive employment centers across the greater Seattle region. Amazon is a piece of a much larger economic picture in the Pacific Northwest.

Seattle and Amazon’s relationship seems well balanced. Consequently, Amazon hit the market at the correct time and have not saturated it. Amazon’s next step is to seek an area for HQ2 that has the population, real estate availability, and infrastructure to support their continued growth.

Where should Amazon’s HQ2 be located?

A few options that crossed our mind:

Detroit 

Detroit

Detroit was formerly known as one of the manufacturing capitals of the United States.

Additionally, Detroit used to be known as Motor City. Amazon could revitalize that American working spirit under the banner of a 21st-century tech giant.

Amazon would be hard-pressed to find a large urban area with real estate space Amazon could acquire and a city that would openly embrace a new titan of industry like Detroit would.

This city has proven they know how to work. As a result, Amazon’s HQ2 would find staff in an eager to work populace

Pittsburgh 

Amazon is one of the largest employers of recent college graduates in the United States. While Pittsburgh has multiple world-renown colleges nearby.

Pittsburgh has the populace to support Amazon’s HQ2, the city makeup to allow them to grow, and the local institutions to feed into Amazon’s personnel at all levels.

While Pittsburgh may not need the revitalization like other cities, it cannot be denied they are a good fit for HQ2.

Atlanta 

Atlanta

Atlanta is the turn-key fit for Amazon. Atlanta’s a major supply chain hub, tech company friendly, and hosts an international airport.

An international airport would be of particular importance for Amazon employees going between HQ1 in Seattle and HQ2 in Atlanta as well as abroad.

Nice weather and affordable housing combined with a large populace make an attractive proposal for Amazon.

Four Ways to Manage Expectations for a Productive Business

Four Ways to Manage Expectations for a Productive Business

Expectations. We all have them, about everything. What happens when expectations do not match reality?

Disappointment. As a small owner, disappointment in team members leads to discontent. Discontent leads to departure.

Managing expectations is the only proactive way to ensure your team members are satisfied with their position.

Be open. Be honest.

Honesty is always the best policy.

First of all, write an honest job description that includes a realistic overview of the position and responsibilities.

Have a direct and honest interview process. This should always involve a Hiring Member that is symbolic of the brand. This is the time, before the expectations to see if this person is naturally on-brand. Inauthenticity on both sides of this process will lead to a troubled relationship from the beginning.

Know who you are hiring.

Join Our Company

You posted your position over three weeks ago. So far, you have yet to get a decent bite until today when you have what seems like a dream applicant shows up in your inbox. They are brought in for an interview, and they seem like the solution to everything needed in the position. In addition, they have years of experience in similar work and here they are, applying for your position when you required minimal experience.

Should you hire them? Likely, but you should also realize that an over-qualified individual applying for a position is generally looking for this role temporarily. Can you offer them realistic advancement?

You never want great talent to walk away from you.

Do not let things stew.

Difficult conversations make everyone sweat.

Know what can be worse? Coming to work and having something to say but not having the courage to face the conversation. As a result, you’re miserable for days, weeks, months, even years?

If a team member is dissatisfied with their position, responsibilities, hours, etc. they cannot be on brand. The focus is now on discontent.

Don’t wait for things to blow over as they may boil over instead.

Plus, happy employees are 12% more productive.

Make them feel valuable.

“Wealth consists not in having great possessions, but in having few wants.” -Epictetus

Team Members

Take care of your team members and in turn expect them to take care of you. Genuine care is priceless. To receive value from a team member they have to be shown that they are valuable. From earlier articles, more employees want time off than anything else.

A great example of this in our business is the concept of valuing all people’s time the same. Giving a team more flexibility with their time can be a value add to all team members.

Giving your team members a sense of value and flexibility in their time breeds loyalty. The type of loyalty you can rely on.

Team members with faith in their work, faith in their company, and faith in their leadership are team members who you want to keep around.