How Far Your Paycheck Goes, In 356 U.S. Cities

Knoxville's Low Cost of Living Makes Median Income Feel Like More 

Cost of living is a big factor when individuals and businesses make decisions on relocating their life or their operation.  So, how does Knoxville compare to other cities? 

The government recently released a data set that NPR used to provided a very interesting searchable graphic that provides some insight into how a city's cost of living compares with the average annual income. In the graph below, the left-hand side shows the annual income for typical, full-time workers in different metro areas while t he right-hand side adjusts that figure for the cost of living in each metro area.

The data used accounts for things that people actually buy in each city. For example, in places like New York City where car ownership isn't as common that cost would not figure into the data as much.

As the graphic shows, Knoxville is a less expensive place to live with a median income of $28,857 per year. However, thanks to a low cost of living it's like you are really making $29,873 per year.  Compare that to a city like San Francisco.  Their median income is $44,452 but the cost of living drags it down to $32,289.  Ouch--better stock up on Rice-a-Roni.

Just another reason why Knoxville is growing into a prime relocation destination.

Click here to read NPR's article and see infographics for other cities.

KNOXVILLE RANKED AS A “MILLENNIAL MAGNET” BY USA TODAY

KNOXVILLE RANKED AS A “MILLENNIAL MAGNET” BY USA TODAY

High national rankings keep rolling into Knoxville.  USA Today recently put Knoxville on its list of “Millennial Magnets”, a list ranking cities that have more 20-somethings than teens. These cities—rooted in high education, technology and development—are serving as new kinds of cities, born from deep demographic shifts and built from the power of technology. Knoxville, like many of the other cities listed, were traditional college towns that attracted students who then left after graduation for work. However, Knoxville has become a post-college town.

The region has long been known as ‘Innovation Valley’ by regional economic development agencies due to the concentration of scientific and technological assets that surround the area, as well as business sustainability efforts. The availability of high wage jobs for educated individuals at places like Oak Ridge National Laboratory, Y-12 National Security Complex, The University of Tennessee and numerous recession-proof healthcare industries surround the area make those that come for an education more likely to stay.

Ranked 6th by Forbes magazine among Best cities for Jobs, the area is #1 in green job growth according to the Brookings Institute. By combining technological resources with the Knoxville area’s central location, the region is competing for top level jobs and job creators in the expanding green industry.

According to the ACCRA cost of living Index, Knoxville’s cost of living is well below the national average, and either competitive with or lower than each of its southeastern competing cities like Memphis, Nashville, Charlotte, Raleigh, and Columbia.

These things, combined with a thriving cultural, educational and recreational landscape make Knoxville a major player as a growing city full of future business leaders.

Student of the (CRE) Game

The largest gains in the commercial real estate market in Knoxville over the past year have been in multi-family.  More specifically, in student housing.

Projects are popping up all over downtown and west Knoxville with a focus on Fort Sanders and now Sutherland Ave.

In 2013, Rick Gentry, Cushman & Wakefield | Cornerstone's multi-family specialist, closed two of the largest student housing transactions in the market.  He talked to WBIR about the explosion in the segment.


Student-housing Explosion in Knoxville

Click on the link for the story.

Knoxville Earns Another Big Ranking

Following accolades from magazines like Forbes and Inc.; the Milken Institute is pushing Knoxville as one of the best - performing metro areas in the country.   See the story below from today's Knoxville News Sentinel. 

Last week Forbes ranked Knoxville second in the US in the "Happiest Place to Work" list.  

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Knoxville's employment renaissance has caught the eye of a prominent think tank.

The Milken Institute, a nonpartisan research group based in Santa Monica, Calif., on Thursday released its list of the country's best-performing metro areas.

Knoxville came in at No. 25 among the 200 largest metros, jumping 33 spots compared to 2011.

The Milken index measures job, wage, and technology performance to compile its rankings — with employment growth weighted most heavily — but does not use quality-of-life indicators such as commute times or housing costs.

The Knoxville area garnered particularly strong marks for job growth between 2010 and 2011.

The local economy has shown signs of strengthening even since the Milken Institute conducted its analysis. In the final weeks of 2012, a trio of industrial companies announced expansion plans that are slated to add more than 300 jobs in the area.

That list includes Italian tile-maker Del Conca, which said it would build a $70 million plant in Loudon County that would create 178 jobs.

Rhonda Rice, executive vice president of the Knoxville Chamber, noted Thursday that Knoxville's best performance came on the most recent statistical measurements and said 2012 saw even more of an increase. "We're very optimistic about good things on the horizon here for the Knoxville region," she said.

Knoxville had the highest ranking of any large metro area in Tennessee. Nashville was listed at No. 27, Chattanooga at No. 80 and Memphis at No. 99.

The country's top-ranked metro area was San Jose, Calif., followed by Austin, Texas, and Raleigh, N.C.

Las Vegas, Modesto, Calif., and Lakeland, Fla., were ranked at Nos. 198, 199 and 200 on the list.

Technology is a wonderful thing...most of the time

Yes, technology is a great...cell phones, emails, cameras.  Everything in our life is recorded and we are always available.  Of course the down side is ...Everything in our life is recorded and we are always available.  But this is about one certain type of technology and how it can help those of us in the commercial real estate world.  Its simple and great for exposure (not the Rep. Anthony Weiner type of exposure).

Recently I took my iPad3 out for a test run to see what I could us it for to create marketing videos for properties we represent.   It was truly shocking how quickly it came together.

I spent a total of 45 minutes shooting videos and taking pictures at three buildings.  With in an hour of getting back to my office I had created my first movie and uploaded it to YouTube (check it out http://www.youtube.com/watch?v=yCw0KhDdvt8).  I didn't even have to read any directions or take a tutorial on iMovie.  I just that easy.

Continuously I am impressed by how quickly the world of marketing commercial projects is changing.  Everyone needs to keep up.

Blogging Change....

Time to make a change to the blogging platform...

I know most of you are asking "Why change now?  You haven't blogged in a LONG time."  Its a simple answer: Time.  The hours required to write a long-form blog are just to overwhelming to put together a quality product that I want to put a companies name on.  So we are going to try something different. 

Instead of a weekly, long blogs we are going to try shorter, more frequent posts.  Sometimes it may be posted a few times a week.  Other times is will be once a week.  It just depends on what information is coming out that day.  There will still be quarterly market reports and longer posts but they will not be as often.  However, the quality of the product will still be among the best in the business. 

Stay tuned for more...

John Adams (@johnmadams3 on twitter) is a presenter at this weeks SIOR National Convention in Los Angeles.  John is an expert in commercial real estate technology, along with being one of the best brokers in the region.  You can follow his blog at www.johnmadams3.blogspot.com.  He will have more information from SIOR. 

Next month we will be at the Cushman & Wakefield Symposium in Las Vegas.  Again it will be a great opportunity to gather information we can use on the blog. 

Thanks for reading. 

As always, you can reach us at 865-450-8883 or www.cornerstonecres.com

NEW Corporate Offices May Not Include...Offices!

Office space is changing.  That is for sure.  In the last two years I have worked with three Fortune 500 companies that have cut their existing offices spaces by more than 50% (without cutting employees).  Hard walls are out.  Cubes are in. 


There are reasons for this:
1.  In the three cases stated above the offices were built when the market/economy was hot.  Lots of money flying around.  Everybody gets extra space. 


2.  It status thing.  The younger generations apparently don't care about having an offices.  They don't need it to show their "status".  From what I can tell to someone under the age of 25,  status only applies to Facebook and Twitter accounts. 


Some of these features have been included in Cushman & Wakefield|Cornerstone's new offices, although these features aren't quite in full acceptance yet. 

The article below from USA Today outlines the changes that are taking place in office space nationwide.  While every market, and every business model, is different, I could seen this trend continuing for a while. 


http://www.usatoday.com/money/workplace/story/2012-06-05/tech-creates-workplace-everywhere/55405518/1 
At online retailing giant Zappos, two of the top managers have no titles, and no one — except for two in-house lawyers — has an office. Not even the CEO.


The Nevada-based company's 1,300 workers (average age, 36), from the founders to programmers, mill about rooms without walls. Small cubicles serve as stations to park personal items, but work can be done anywhere — on couches, at shared tables or at the coffee shop down the street. Ear buds, not partitions, act as sound barriers.


"They're more concerned about being around other people who do cool things than how big their desks are," says Zach Ware, a no-title Zappos executive. "Our workspace has become our laptops."

Technology, the urge to go green, telecommuting and a generation of workers who grew up with smartphones in their hands and computers in their laps are revamping the work culture. Companies are knocking down walls, even dismantling cubicles to create a free-flowing layout that many believe gets the creative juices flowing and encourages collaboration.


And they don't need an assigned work station to call their own. Their cherished family photos adorn not their cubicles but their computers' wallpapers. They're kept on smartphones and posted on Facebook, not pinned to a bulletin board at desks.


At the same time, office equipment from printers and copiers to computers are shrinking. The paper trail is also waning, making big file cabinets obsolete in many work areas.


The office of The Office is fading and shrinking in the process. Younger workers welcome the change, says Patricia Lancaster, head of The Lancaster Group real estate consulting company who teaches at New York University's Schack Institute of Real Estate. "They don't aspire to the big corner office," she says. "They don't even want it."


There's an added bonus for employers: Open floor plans accommodate more workers in less space, a welcome savings for companies scrambling to cut costs in a rough economy. Efficiency is also at a premium at a time when environmental concerns are on the rise.


A survey this year by CoreNet Global, an association of corporate real estate and workplace professionals, found that for many companies, the average allocation of office space per person will fall to 100 square feet or less within five years.


Only 24% of the 465 companies surveyed said they had already hit this low, but 40% said they would by 2017. Square footage per worker has already slipped from 225 square feet in 2010 to 176 today, according to CoreNet.  The main drivers: More companies stressing "collaborative and team-oriented space" and "smaller but smarter" offices in a bad economy, says Richard Kadzis, CoreNet's vice president of strategic communications.

The trend is expected to accelerate as 10-year and 15-year leases signed in the late 1990s and early 2000s expire. "That is going to encourage companies, when they do go to market in this new environment, to try to make upgrades to a 21st century office space," says Dan Fasulo, managing director of Real Capital Analytics. "It absolutely makes sense. Your more forward-looking firms have already made the transition."  Offices traditionally use 200 to 300 square feet per worker — an average of everything from clerks' cubicles to executive suites. By encouraging staff to work from home, getting rid of offices, even resorting to "hoteling" — workers check in when they're in the office and get assigned a desk for the day — some companies are slashing average square footage per worker to less than 100, about the size of a one-car garage.


"Obviously, you're going to need less space when you have open space," says Adam Leitman Bailey, a New York City real estate lawyer. "American workers need less space than they did 10 years ago. Just by not needing an office, you're saving space."


Working in the city
The move back to cities and to urbanized suburbs close to city centers, transit lines, shops, restaurants and apartments is helping fuel the trend. Space in developed areas is more expensive and harder to find, but that's where younger workers want to be.


"Cities around the world are competing to become creative digital lifestyle centers," Lancaster says. "To do that is not how big offices are. (Young workers) are into culture, parks, working closer to home, having dogs in the office."
By being located near urban services, companies are saving space. Not as many workers drive, so fewer parking spaces are needed, and eateries and fitness clubs are nearby, so there's no need for a large cafeteria or on-site health club.


"We consider the entire city to be a workplace," says Patrick Olson, who heads the development of Zappos' new downtown campus in Las Vegas.  Now headquartered in Henderson, Nev., Zappos will move next year. The company now averages about 120 to 150 square feet per employee. When it moves into its new digs in the old City Hall building, it will slash the ratio almost in half.  The trend "could help lead to somewhat of a rebirth in some of these older cities," Fasulo says.


Accenture, a global management consulting and technology services company, last month moved its Washington, D.C.-area office from a more remote suburban location in Reston, Va., to the very urban Ballston area of Arlington, across the Potomac River from the capital.


The new office has a cafe that doubles as a working area, technology that allows employees to work almost anywhere, and walk-and-work stations equipped with low-speed treadmills and electric height-adjustable desks. Floors are made of cork, and countertops of recycled glass. More than half the workers are Generation Y's twenty- and thirty somethings.  The federal government, which occupies millions of square feet of office space in the Washington area, is moving in the same direction, says Marc McCauley, director of real estate development for Arlington Economic Development.  The General Services Administration, which oversees office space for government agencies, owns and leases 354 million square feet of space in 9,600 buildings in more than 2,200 communities nationwide. When renovation of GSA's downtown Washington headquarters is finished next year, the building will accommodate 4,500 workers — almost 2,000 more than today — because of shared work spaces and telecommuting.  "Teleworking is getting a big push from the federal government," McCauley says. "Technology makes it so much easier."

Working from home is on the rise nationally. In 2005, 3.6% of the 133.1 million workers ages 16 and older telecommuted, according to Census data. Five years later, 4.3% of 137 million workers did their jobs from home.


Open spaces not for all
Not everyone is embracing the office-as-living-room concept.  "We lawyers still need offices, and that is not going to change," Bailey says. "We need quiet to focus on our briefs and deals."  Despite that, space needs are declining even in offices that have more traditional layouts, because technology allows people to take on more duties. Lawyers, for example, don't need secretaries to take dictation. They do their own typing. Receptionists may greet visitors and also handle social-media and technical duties.  "There's a struggle right now between the old and the new," Bailey says. "We don't know what works. In the end, it's what's going to be best for the talent we hire."


In Houston, a hub of the oil and gas industries, traditional office quarters still rule, says Coy Davidson, senior vice president of Colliers International, a large real estate services firm. "They're still using private offices," he says. But Davidson himself often telecommutes.  "My office is 30 miles away from my residence, and I live in a big city with a lot of traffic," Davidson says. "I still have a fairly large office, but I'd be fine with 150 square feet myself."


No one knows how far the trend will spread.  Nevertheless, there is an undeniable generational shift in workers' relationships with the work space. "The corner office doesn't have the cachet it once had," says Robert Lang, professor of urban affairs at the University of Nevada-Las Vegas. "There are other markers for status. It's not the turf. It's your network power."


Desks? Offices?  
Stephanie Michael, 22, just graduated with a double degree in science and economics from the University of Maryland and is headed to the University of Virginia law school in the fall.
"I don't really see that as being super important," Michael says. "I don't see status as office size." What she values more are flexible hours and the ability to work from home a few days a week, as some of her friends already do.But because technology allows work anytime, anywhere, it can become "a Faustian bargain," says Lang, referring to the legend of Faust, who traded his soul to the devil in exchange for knowledge. "The work is everywhere, unfortunately. There is less time you have to be in an office, but now you're sitting on a beach texting somebody for work."

Judging Investors

The blog below is taken from Matt Mireles the founder and CEO of SpeakerText.  It is adapted to fit commercial real estate but in the end is applicable to almost any business where investors are needed.  NOTE:  In many real estate deals investors can be a silent partner who has no input in to running the building (just collecting the check). Still this is a good check list for when you are looking for investors for your next purchase/development.

You can read all his blogs at http://www.metamorphblog.com/.   Enjoy.

Pitching your potential investment can be  a deeply personal matter.  More often than not, investors––politely or not––call your baby ugly. And that hurts.  Developers should learn to not take the criticism too personally. But in the end, it is personal. They are judging you. And your baby. Thumbs up, or thumbs down. 

And such is life. But how should we  judge them? Not all investors  are created equal, after all. Once betrothed, the investor––unlike the entrepreneur––is unfirable, a step-father to your newborn, an undivorceable spouse in an epic marriage.

Below is a formula. 

“Do I want this guy on my board?” 

This, above all else, is the question. 

Another way to put it:  Do I want to be accountable to this guy when things get tough? Do I want this to be the guy who has my back?

In good times, it’s always all smiles. But not all times are good. 

And it is this experience––combined with my own listening and study of the travails of those who have come before me––that informs what I am about to say. 

1) Intelligence

It should be obvious, but I want to be convinced that the investor is a very smart man. Preferably smarter than me. Steve Young (the 49ers QB with a law degree & his own private equity firm) once said that he aims to be “the dumbest guy in the room.” Amen to that.

The beauty of hanging around and dealing with really smart people is that they have a  rub off effect. Really smart people challenge you and force you to think bigger, harder and, at the risk of sounding completely vague, better. They pick apart your bad ideas quicker and see through the waste that even you might have convinced yourself to believe. 

That said, scoring high on the intelligence test is not a dealmaker. Brains is a big plus, but brains without self-knowledge or an approprite level of humility is just fucking dangerous.

2) Security & Self-Confidence

People who are insecure make bad, irrational decisions. We are all insecure in some way, so really it’s just a matter of degree. More is worse, less is better.

Generally speaking, being insecure causes you to make decisions based on fear, and people who are motivated by fear alone cannot embrace a big, disruptive vision. They end up being fundamentally risk-averse and drive you to be too. Invariably, this leads to a focus on outside factors, like what other people are doing. 

Even worse, you can’t honestly call bullshit on people who are insecure without undermining your relationship with them. For me, this is an instant dealbreaker. 

People who are secure, on the other hand, like to be challenged. They enjoy vigorous debate. The intellectual swordplay is what they live for. 

When someone is secure in themselves and their position, you can be honest with them. And I ONLY want to work with people I can be honest with. Life is just too short and I’m just not that patient. 

3) Reverence for the Entrepreneur

I can see how easy it is for venture capitalist to think of themselves as masters of the startup universe. As a VC, people compete for your attention and pitch you constantly. They are the judge in a never-ending baby beauty contest. It must get tiring. And in their shoes, I can see how it would be easy to think that the world revolves around you. 

But it does not. 

At the center of the entrepreneurial universe is the entrepreneur. And behind the entrepreneur is the employees, the team, the company. It is they who are the heros. It is they who operate unhedged. It is they who take the real risk. 

In my mind, good investors get this. They understand their place in the ecosystem as enablers. They don’t let their celebrity status get to them. Which brings me to my next point… 

4) Humility & Self-knowledge

To be humble is to know your strengths and weaknesses, to be aware of your place place in the world. It does not mean being non-confrontational or a softie.

My favorite people are those who will push hard and argue vociferously on behalf of an idea but then freely admit that it’s possible their assumptions are wrong. They test you, but acknowledge the limits of their own knowledge.  Or maybe they really do know something about your corner of the universe. The important part is that they are acutely aware of when they do know something and when they don’t.

The other thing that’s great about people who possess a high-level of humility and self-knowledge is that they are not afraid of being challenged. Because they don’t have huge egos, they are constantly listening to the people around them and learning new things, which in turn makes them amazingly capable as teachers. And god knows I need teachers in my life. 

5) Does he understand what it means to be an operator?

The investors that scare me most are those who posses a low-level of humility in combination with a non-operational background.

Recently, I met a 20-something year old VC from a supposedly top-tier firm who served on the board of several companies. I had looked him up on LinkedIn prior to our meeting and noticed lots of board seats but little other experience beyond a graduate degree from a very prestigous university. He was obviously very intelligent, but after several minutes of opining to me about my industry, I decided to turn the tables a bit and ask…

“I noticed that you sit on the board of several companies. Tell me a little bit about your background and experience building companies that qualifies you for this role. What companies have you founded? As a board member, I’d report to you and you’d have the ability to fire me. In essence, you become my boss. Why should I entrust you with this power?”

Part of me actually wondered if this guy had had some previous experience that I didn’t know about. He squirmed. “Well….ahh,” he stuttered. “You know, board members are there to, ahh, give…intelligent feedback and, ahh, be there….ahh….as a sounding board…for the entrepreneur, you know.” 

What amazed me was not the vacuity of his response but that multiple CEOs had allowed this guy to take a board seat and a position of responsibility caring for their babies. 

As far as I can tell,  there’s good VCs out there who haven’t really been operators. But they tend to have grey hair and not be involved in super-early, seed-stage investing. As a first time founder, I want people around me who can understand and help me manage the extreme uncertainty of company building at the ground floor. 

6) Does he want me to lie to him? 

One of the red flags I look for is seed investors that want me to make things up and lie to them. This typically manifests itself in the form of long-term financial projections. “What will your sales be 5 years from now?” 

I have no clue, and if you’re asking me that question, neither do you. 

I am a first-time founder in an immature, rapidly growing market. Pricing, exact business model––these things are all up in the air. My task now is to go out and prove certain assumptions about the product and the market in a way that we matched the two up and acheive the magical paradise that is product-market fit. Before I’ve done that, don’t ask me for financial projections other than my expenses, because what you’re really doing is asking me to lie to you, and I hate that. 

7) Does he teach me things?

Some of my favorite investors are those who, regardless of whether they’ve said yes or no, teach me something about my industry, product, market, team, etc. Even if they say no, they’re the ones I’m gonna go back to down the road and try to lure them into the yes column. 

My reasoning is this: If in the course of a single 30-minute meeting this person has added value to my company and my life, just imagine how much this person would contribute if he/she sat on my board! MUST HAVE THIS PERSON ON MY TEAM. 

8) Is he a happy person? 

The world is full of extremely intelligent and yet unhappy people. These people are like poison. Their unhappiness rubs off on you, and invariably, they attempt to punish you and take out their frustrations with their own lot in life on you, potentially disrailing your company and your life. 

Again, I don’t want you to confuse being happy with being soft. One can be both happy and hard-nosed at the same time. In fact, I like to consider myself a happy warrior. I love life and relish in the entreprenurial adventure, but yet I am (or try to be) ruthless in how I judge and execute that which is important around me and my baby. 

At the end of the day, happy people are optimists. And when the world is going to hell, as startups seem wont to do (not to mention life more generally), you need happy, optimistic people around you to stay focused and productive amidst the storm and cataclysm. 

Oh yeah, and life is just too short to surround yourself with unhappy people. They suck on your soul, and leave it empty. 

If you have other questions regarding commercial real estate, investors or commercial investment strategies please visit us a cornerstonecres.com  or you can reach me at 865-617-2989 or jcazana@cornerstonecres.com

Justin Cazana, CCIM

Cushman & Wakefield | Cornerstone

Principal/Broker

Two of Knoxville's most successful real estate firms join forces!

You can say you heard it hear first...


Beginning April 2nd, two of Knoxville's most successful real estate firms will merge to create the region's most comprehensive real estate services.  

Center Court at Lonas

The management and leasing divisions of Commercial & Investment Properties will combine with Cushman & Wakefield | Cornerstone to open a new office at Center Court on Lonas.  The transaction has been in the works for several months and things will come together next week when the new office opens its doors. 

With the merger of the two firms Cushman & Wakefield | Cornerstone now manages some of Knoxville's most prominent developments; such as Parkside Centre, Century Park, and Two Centre Square.  Cushman & Wakefield | Cornerstone adds 1.2 million sq. ft. of management to its current management and leasing portfolio of over 6.8 million sq. ft in middle and east Tennessee. 

There is no other firm in the region that can match Cushman & Wakefield | Cornerstone's reach, experience and knowledge on all sides of the real estate world.  The brokerage and property management staff designations include; Certified Commercial Investment Managers (CCIM), Society of Industrial & Office Realtors (SIOR), Certified Property Managers (CPM), Certified Shopping Center Managers (CSM) and members of the International Council of Shopping Centers (ICSC).

Cushman & Wakefield | Cornerstone's new offices

Cushman & Wakefield | Cornerstone offers a client centered approach for customized real estate solutions, not only locally, but globally.  The company offers services that address the consulting and strategic needs of businesses making critical real estate decisions. Cushman & Wakefield | Cornerstone leases and/or manages approximately eight million square feet of commercial property in Tennessee with offices in Nashville, Knoxville and Chattanooga.

Commercial & Investment Properties investment and development operations will continue as well.  The 40 year old company has been a stalwart in the east Tennessee development community since it was opened by Nick Cazana in the early 1970's.

“I am thrilled to expand our Knoxville operations with the high caliber and very professional team that Nick Cazana has built over many years. The combination of this property management platform and our existing brokerage operation enables us to serve all of our client’s needs seamlessly” says Warren D. Smith III, CEO of Cushman & Wakefield | Cornerstone.

For more information about Cushman & Wakefield | Cornerstone please contact us at 865-450-8883 or check out www.cornerstonecres.com

Good news for Knoxville and Interesting Office Developments

Its one of those good news, bad news things...

Good: Knoxville will be home  to the strongest job market in the country this spring, according to a national survey released by Manpower Inc.  Twenty-five percent of the Knoxville employers surveyed said they would add jobs in the April through June period.

Manpower surveyed more than 18,000 employers in the 100 largest metro markets.

Bad:  Tenants are squeezing employees in tighter than ever before. 

According to the Wall Street Journal, the "Corporate Cram" is single-handedly putting a hiccup in the office recovery.

Companies looking for cost savings are increasingly packing more employees into less space, a trend that is helping cause U.S. vacancy rates to linger at high levels even as employers add jobs in the slowly expanding economy.

Panasonic Corp., for example, is planning to move into a new 280,000-square-foot U.S. headquarters in Newark, N.J., next year. But it is taking significantly less than the approximately 575,000 square feet of office and labs at its current campus in Secaucus, N.J.  The electronics company says it isn't reducing its head count, but is simply reconfiguring its offices.

Employers gradually have been taking up less space for decades, but real-estate professionals say the drive to use less space has picked up since the economic downturn, as companies look to trim costs where they can across their budgets. 

Workstations are shrinking and private offices are disappearing, replaced by cubicles with low walls, and more employees are working remotely.  Companies today are taking space with an average of about 200 square feet per employee, down about 20% from a decade ago.  

Office landlords have been encouraged lately by news of job growth. They also are hoping that the dearth of new construction will give the market a boost.To be sure, not all companies are overhauling their space. Many tenants simply renew their leases when they come due, which makes it harder to rethink their approach to workspace than if they were moving to a different building.

But some industries are both contracting and using less space per employee. For example, many companies in the financial-services sector—a traditional driver of the office-space market—have been laying off workers and looking for more-efficient workspace.

Just when you think things are getting better...

The Seven Mistakes Tenants Make When Leasing Office Space

It seems simple...set out a plan and execute the plan.  Works in just about every aspect of business.  But you have to know the details to actually create the plan.  Bert Rosenblatt and Anderw Stein of ITRA Global came up with an impressive list of details you don't want to miss when you are looking for office space.

1. Lack of Planning. Believe it or not, many tenants aren’t clear on what exactly they need. If you’re out looking for ten thousand feet but you actually need fifteen thousand, you’ve got problems.

Have an architect do a space program and figure out how much space you really need.
A lot of architects will do this for free as a favor to your tenant rep broker. Between a good architect and a good broker you can get clear on things you might not be thinking about, like floor load capacity – do you have a safe or a lot of equipment – then you need reinforced floors.
Do you need extra electric to your space? Have special telecom needs? Knowing these details up front will save you time, money and aggravation down the road.

2. Lack of tenant representation. We could write an entire article on the benefits of using a tenant representative but suffice it to say there’s really nothing better than hiring one to be on your side. A broker understands the ins and outs of the market; they can negotiate for you, and best of all, can narrow down the buildings that would be best for your particular business. Their know-how and advice are indispensible, and they can prevent you from making some major mistakes which you will pay for down the road. Such is also the case with an attorney. Many tenants hire lawyers that don’t specialize in commercial real estate – this is a mistake. Like your tenant representative, you need an attorney that understands the monster that is commercial real estate.
 

3. Lack of document inspection. Leasing an office space means a whole lot of paperwork. One of the most common mistakes tenants make is that they’re not careful enough with what they sign. Everyone should read the documents – you, your attorney and your broker.

Further, the ownership documents need to be vetted too. Make sure your space is legally zoned for commercial purposes and for your use in particular, and that it conforms to various safety codes and is built in accordance with the prevailing rules and regulations.

4. Rent and security deposit. Before agreeing to the monthly rental, many people do not benchmark similar properties, and end up paying rent through their nose. It is important to compare similar office properties and find out the going market rent in that area before entering into negotiations with the owner. This is Real Estate 101 for tenant rep brokers. Hire them - they know what they’re doing. However, if the owner of the office space seems to be in a tearing hurry to rent out his place, you can always negotiate with him and save yourself some money.

5. Not checking lease terms. A tenant must read and understand the lease terms carefully.  

Are you comfortable with the notice period? Let’s say the landlord has the right to relocate you to another floor or space in the building (something that is common for smaller deals) – how much notice do they need to give you?

What if the lease says 30 days? Can you really pack up and execute a move of both your physical stuff and your technology in 30 days? Probably not.  Do you have a sublet and assignment provision? Is it fair?

6. Underestimation of negotiating leverage. Tenants have a tendency to think that the landlord is all-powerful, but that’s not the case. Ultimately, a landlord is in a service business, and his business is to keep his building full. If this means he has to negotiate with his tenants to fill his spaces, he will. 

7. Too little time. Tenants drastically underestimate how long it takes to renew a lease or to move. Depending on how much space you have and how complex your technology is, it could easily take 8- 12 months to negotiate your deal.

As always, the professionals at Cushman & Wakefield|Cornerstone CRES can help you through these steps.  Feel free to contact us at 865-617-2989 or jcazana@cornerstonecres.com



Bert Rosenblatt and Andrew Stein are principals of Vicus Partners, LLC and the ITRA affiliate for New York City – Downtown. Bert Rosenblatt can be reached at (212) 880- 3747 ext. 6619 or at brosenblatt@vicuspartners.com. Andrew Stein can be reached at (212) 880-3747 ext. 6620, or at astein@vicuspartners.com