Bruce At this stage of your space negotiation, where the landlord has asked you to "make an offer", I would HIGHLY recommend (as Angel did as well) that you enlist the assistance of a commercial real estate broker, either as an advisor on the side or as your representative in the negotiations. Your landlord is expert at this. You should bring expertise to the table as well to protect your interest.
Also, let me bring back up a lease strategy that I've mentioned to the group a couple time in the past: a "participating lease". The idea of a participating lease is that your total monthly payment is comprised of a base rent + a participation amount, which can be a % of your income or profit. The principle behind this is that your ability to pay rent improves as your business/membership grows - this helps you reduce your risk at the front end and requires your landlord to have a vested interest in your success as well. This type of lease structure is very typical in restaurants where a property owner may seek to bring a restaurant to their development to drive traffic/ "value-add" the rest of the development (picture a condo complex with restaurant space on the ground floor). This type of lease structure has also become the norm with established Office Business Center operators, who succeed in convincing the landlord that they will bring foot traffic and vitality to a building. I think the case can and should be made that coworking is great for a local community... so would encourage you to consider this in your negotiations. Best Mark *Mark Gilbreath <http://goog_936366688>*[image: cid:[email protected]]<http://www.linkedin.com/in/markgilbreath> * * *LiquidSpace *CEO/Founder/deckhand mobile 208.720.8107 email [email protected] skype mfgilbreath twitter markgilbreath *LiquidSpace(TM) - find a great space to work, now.* **We're a location-based mobile application that lets you use your phone to find a great space to meet and work, book it, check in securely, and share it with your colleagues. Visit www.liquidspace.com<http://www.liquidspaceapp.com/> to learn more! On Thu, Jan 19, 2012 at 12:10 PM, bruce edward Whitaker < [email protected]> wrote: > Thank you all. Wonderful advice! > > We have been offered 3 months free rent because of the situation of the > landlord - the space is above an old railroad station and hasn't been > rented for almost two years. I am thinking that we can propose a 1 year > lease and keep the 2 year as a back-up to get more favorable pricing. > > As for an investment in furnishing the workspace, we are entering into an > agreement with the local municipality/economic development and a government > funding source for corporate memberships allowing them to use the space > within defined parameters. This way we don't have a loan and can get > recurring rent from them each year. > > Like your idea of a full service lease making the prediction of cash flows > that much easier. > > Also appreciate the comment around security for the doors. > > Will also factor in the security deposit. Thanks. > > Does anyone have a lease template as the landlord has asked me to make an > offer? > > Bruce > > > On Thu, Jan 19, 2012 at 1:29 PM, Bruce Yang <[email protected]> wrote: > >> In regards to leases, wouldn't it be better to get a longer term lease? >> >> Let's say you get a 1 year lease at $40sf. Then a year passes and market >> rates go up to $43, then $45 etc. That can have a very real and huge impact >> on your space. the economics rapidly change with even a few dollars per sf >> change. >> >> Invesment: Let's assume you spend $20K on furnishing your new coworking >> space. There is almost no way you can earn back that amount in the first >> year. If you have to move after 1 year, you have to start all over. >> >> A good reason to get a short lease is If you have put a personal >> guarantee on the lease... That's scary and a 1 yr lease lessens your >> liability. >> >> Try to get a full service lease. That simplifies planning by a lot. You >> basically pay 1 amount for "everything". >> >> Also don't forget to consider security deposit. For a company with no >> operating history and no assets, a landlord might ask for 6 months security >> deposit. A sublease might ask for 1-3 months. >> >> I'm curious about months of free rent. Is this normal? How many free >> months did you guys get? >> >> Bruce >> >> On Jan 19, 2012, at 12:06 PM, Angel Kwiatkowski <[email protected]> >> wrote: >> >> > Best if you have a commercial Realtor. It's never too late to get one >> > to help with your lease negotiations. >> > - length of lease (1 or 2 years). >> > I think a new space should try to get as short as possible. Our first >> > 2 leases were each 1 year. Now that we're more established, we are on >> > a 2 year. >> > - is insurance included and what does it include? >> > You'll likely need to get your own insurance to cover your belongings >> > in the space. You can also have your members who leave property in the >> > space get their own renter's insurance >> > - what about taxes and utilities. >> > You'll need to be real clear about what extras you have to pay on top >> > of rent. I've been lucky to get a "Gross" lease each time which means >> > I write one check each month and it includes, rent, utilities etc >> > except internet which we pay for separately. A NNN lease can be a >> > nightmare especially if they don't have an accurate estimate of what >> > heat/gas/electric/water/trash might cost each month. A NNN lease can >> > add almost 50% extra to the price of your monthly rent. Landlords also >> > pass their property taxes and building improvements on to you in a NNN >> > so they make me real nervous most times. >> > - improvements to be included. >> > Yes, you'll need to make sure that each party's responsibilities are >> > fairly and accurately represented. What out for phrases like "tenant >> > will pay for any repairs or maintenance on plumbing, heating, >> > electric." <----also a crappy part of NNN leases. >> > - months of free rent. >> > Of course. >> > - security of location. >> > Try to get your landlord to buy the access system that you choose for >> > the building. You likely won't take it with you when you leave. My new >> > landlord threw down $2,000 for our electronic locks b/c he knows he'll >> > keep them if we leave and it makes his property management easier with >> > multiple tenants. >> > - etc., etc. >> > >> > Long story short--get a commercial Realtor. You won't pay them >> > anything, the landlord will :) >> > >> > On Jan 17, 2:43 pm, bruce edward whitaker <[email protected]> >> > wrote: >> >> We are about to put in an offer on a vacant space to house a new >> >> coworking group. Any and all items to include in the offer would be >> >> very much appreciated. Some that I can think of: >> >> >> >> - length of lease (1 or 2 years). >> >> - is insurance included and what does it include? >> >> - what about taxes and utilities. >> >> - improvements to be included. >> >> - months of free rent. >> >> - security of location. >> >> - etc., etc. >> >> >> >> Even better if anyone has a lease I would love to see it. >> >> >> >> Hoping everyone is well today. >> >> >> >> Bruce >> > >> > -- >> > You received this message because you are subscribed to the Google >> Groups "Coworking" group. >> > To post to this group, send email to [email protected]. >> > To unsubscribe from this group, send email to >> [email protected]. >> > For more options, visit this group at >> http://groups.google.com/group/coworking?hl=en. >> > >> >> -- >> You received this message because you are subscribed to the Google Groups >> "Coworking" group. >> To post to this group, send email to [email protected]. >> To unsubscribe from this group, send email to >> [email protected]. >> For more options, visit this group at >> http://groups.google.com/group/coworking?hl=en. >> >> > -- > You received this message because you are subscribed to the Google Groups > "Coworking" group. > To post to this group, send email to [email protected]. > To unsubscribe from this group, send email to > [email protected]. > For more options, visit this group at > http://groups.google.com/group/coworking?hl=en. > -- You received this message because you are subscribed to the Google Groups "Coworking" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/coworking?hl=en.
