Restaurants will sign for 20-25+ years. Hotels might lease for 50+ years, as they do not always own their own buildings. Anytime where the location is critical, as in business cannot transact elsewhere, you’ll want to stay put.
In these past 5-8 years, I can completely sympathize with itches to lock in lower rates, as rates have only gone up. But cycles do happen, and this bull run has been some 8+ years. I would say that building ownership is only for those with iron stomachs, or those like you, who are committed to staying put with one particular building for a long time. This is no different than those who own vs rent their homes. Be careful re:sublease. Landlords can sometimes require that they get 50% of the sublease rent increase, which quickly evaporates any profit you might take. And then as the sublessor, you effectively become a landlord, without any of the perks of being the landlord. Having more locations is like having kids: each has its pros/cons. You just hope the average is better, and/or one’s pros more than compensate for the other’s cons. JEROME CHANG <> talk to us: (323) 330-9505 <> chat w/ us: <>http://www.BLANKSPACES.com/chat <https://lc.chat/now/7173741/> WEST: Santa Monica <> | <>1450 2nd St (@Broadway) CENTRAL: Mid-Wilshire | 5405 Wilshire Blvd (2 blocks west of La Brea) EAST: Downtown <> | <>529 S. Broadway, Ste 4000 (@Pershing Square) > On Apr 30, 2017, at 8:27 PM, Alex Linsker <[email protected]> wrote: > > What's the longest lease for a coworking place or other businesses that you > know of that works well? Anything 15 or 20 years or more? > > Context: > > After getting paid to do this for 6 years, and having experimented with not > actually leading coworking for a portion of that, I can see doing it for 50 > more years or my entire paid work, whichever is more. > > Why not buy: I don't currently personally have resources to buy a > multi-million dollar building, and we're not yet where I see us buying a > building as a group, and I (and most members) see us growing into multiple > locations, so we could always buy buildings in the future. > > Why not do a shorter lease: When a lease ends, my sense is that rents go up, > and in Portland Oregon, rents have gone up quite a bit and seem to be on > track to go up quite a bit. I haven't found owners would would put a renewal > option into the lease other than to renew at 'market rate' which isn't really > a renewal option. > > The plus to a shorter lease could be that the business model is revised in > 5-7 years (moving out totally benefited us after 5.5 years at our first > location, when we moved to two very different locations), but right now we > are doing well with the current business model, and while I see how that > could change, it doesn't seem likely. > > So I could see a longer lease being better than a 5- or 7- year lease. Do you > know of businesses, or coworking places, that have signed long leases and > enjoyed that? The longest I know of for coworking are 12-year leases, and > that seems like it can work great; I know one company where it makes total > sense. I could see doing a 15- or 20- or even longer lease, with the option > to sublease or assign the lease. I've heard of one big retail company that > does 75-year leases, which seems too long to me, but where I'm at right now, > I could see between 15 and 20 years feeling good. I could also see doing > 7-year leases, and renegotiating or moving every 7 years, and having rent go > up 15% every year until we hit peak, whenever that will be (I don't think we > will for at least 15 years). > > A related question is risk management; if we have 2 venues now and grow to > more, what are the risks of growth and other risks (obviously not growing too > fast or overcommitting -- which could be what a too-long lease does -- but > under-committing seems to be what a too-short lease does, so it seems to > balance out), and how does one balance that. > > Would love your perspectives and hearing about your own experiences. > > -- > Alex Linsker | Business Owner > Collective Agency <http://collectiveagency.co/> > (503) 517-6900 office | (503) 369-9174 mobile > 3050 SE Division, Suite 245 | Portland Oregon 97202 > 1410 SW Morrison, Suite 850 | Portland Oregon 97205 > > -- > Visit this forum on the web at http://discuss.coworking.com > <http://discuss.coworking.com/> > --- > You received this message because you are subscribed to the Google Groups > "Coworking" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected] > <mailto:[email protected]>. > For more options, visit https://groups.google.com/d/optout > <https://groups.google.com/d/optout>. -- Visit this forum on the web at http://discuss.coworking.com --- You received this message because you are subscribed to the Google Groups "Coworking" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
