So you’ve done your research. You know what a tenant representation broker is and the value they provide in helping you with your commercial real estate needs (from finding new space to negotiating favorable economic terms to helping review a lease document).
But did you know they can help you do more than just locate new space? At AQUILA, we want you to get the full value out of your relationship with your tenant representative, so we’ve put together a list of other value-add services you can request.
In this article we will explain eight common problems you may run into that a tenant representative can assist you in solving.
1. Finding More Employee Parking
Parking is a hot commodity in Austin, particularly in the CBD and surrounding areas. Whether you need to negotiate for additional parking during your lease negotiations, or you’re in an existing space but have found that the available parking no longer suits your needs, a tenant rep broker can help you think outside the box to find a solution that will work for you.
For example, if your company has atypical operating hours, often times a tenant rep broker can help you negotiate more parking spaces for after hours parking at your building.
For companies with more traditional hours, options may include negotiating to lease additional parking spaces at an adjacent surface lot or parking garage, or even working out an agreement with a nearby church or restaurant to use their parking during alternate hours.
Should the property you occupy change hands, it’s your tenant rep’s responsibility to determine how this might impact you from a day-to-day perspective as well as long term.
For example, does the new owner have plans to renovate or make improvements to the building? If so, will there be disruptions to the specific space or parking areas? What impact will this have on property taxes and operating expenses? Will property management change?
Contact your tenant rep as soon as you know about a change in ownership so they can help you understand what exactly it will mean for your company.
If you are partway through your lease term and find you’ve outgrown your current space but don’t have any expansion options (or have already utilized them), a tenant rep broker can help you find the right solution.
Depending on your landlord and the availability in your current building, a tenant rep broker can help you evaluate three potential solutions:
If there is available space in your current building, your tenant rep can leverage your growth and help you negotiate an expansion within your current building.
If there is not enough space to accommodate your required growth within the building and you’re open to a remote office, your tenant rep can help you locate a satellite office and discuss the pros and cons of having multiple offices.
Finally, if there’s not room for expansion in your current building and you need to keep all of your employees under one roof, your tenant rep can help you evaluate the idea of of subleasing your existing space and relocating to a new, larger space.
The need to sublease your space can arise for a number of reasons. Perhaps you’ve outgrown your current space and are relocating to a larger location. Or maybe you’ve downsized within your suite and want to sublease the additional space.
Whatever the reason, subleasing your space can be a valuable decision that prevents you from paying thousands (or hundreds of thousands) of dollars on vacant or unused space.
Your tenant rep broker can help you analyze your lease to ensure that your sublease language allows you the most flexibility. Knowing who you can sublease to as well as if the landlord has the right to recapture your space are all very important factors in determining how to best market the space.
Additionally, your tenant rep broker can help you market your space to the brokerage community as well as tenants who occupy the same building. Your broker will help you negotiate with prospective sublessees to ensure you get the most favorable terms..
Did you know that even if you still have a number of years left on your lease, it may already be time to begin planning for your renewal?
By engaging a tenant rep broker well before your renewal notice period, you will have the time to thoroughly analyze the market and see what options are available.
Even if you think you want to just stay in place, it is important to go through the entire site selection process.
By knowing exactly what is available on the market, you can generate leverage in your negotiations with the landlord. Creating this leverage will allow you and your broker to negotiate for better rental rates and potentially even additional concessions that are uncommon in renewals such as a tenant improvement allowance. Knowledge is power and knowing what other options could fit your company is extremely important in a competitive real estate environment.
While rare, it is possible that you and your landlord will reach a disagreement during the life of your lease. It may arise from different interpretation of renewal or expansion market rental rate language. These lease provisions typically outline how the rental rate is calculated if you decide to renew or expand. Lease comparables are an important part of this discussion. Your tenant rep should be able to provide you with the most recent lease comparables to help you in determining the market rental rate.
Should this situation arise, your tenant representative will be by your side through the entire process.
7. Deciding to Lease or Purchase
Purchasing you own building can be a valuable investment for your company. However, it comes with additional risk and a number of new responsibilities and expenses, including hefty upfront costs, maintenance and repairs.
A tenant rep will perform a thorough lease versus buy analysis, that will look at the pros and cons for your company. Company growth, cash on hand and the availability of resources within the company to help manage a building will all be part of the analysis.
Whether you just signed a lease and are looking for a trusted project manager to lead your office build-out, or you are midway through and are looking for a reputable office furniture company to update your office layout, your tenant rep broker will be ready with a recommendation.
Rather than sourcing vendors on your own, it can save you time and heartache to turn to your tenant rep broker for real estate vendors of all sorts.
Because your brokers spends all day, every day in the commercial real estate world, they’ve typically worked with a number of vendors of category. And not only have they worked with them, they know exactly who they trust, and who they don’t.
Hopefully you now have a better understanding of range of services a tenant rep can help you with. Just because your lease expiration isn’t around the corner, it’s never too early to engage a tenant rep to help you analyze your current real estate situation and evaluate your needs.
If you’d like to talk about your current commercial real estate stresses and needs, please, schedule a consultation to talk to one of our tenant representation experts today. They’re ready to help you find the solution that will work for you.
Or to continue reading more about hiring a tenant rep broker, check out these other helpful articles:
Deciding if you should renovate your office is a daunting decision, but attempting to oversee the process by yourself can be even more overwhelming.
At AQUILA, we understand the weight of a potential office build-out or renovation, and want to help you navigate the process. Our tenant rep brokers are often asked, “Why should I hire a project manager to lead my office renovation?” If you have had this same question, you’ve come to the right place.
Having worked on hundreds of office renovations and build-outs, as well as ground-up developments, we’ve narrowed it down to “The Big 3” benefits gained by hiring a project manager, which we will outline for you in this article.
1. Save you time so you can focus on your business goals.
A project manager’s main objective is to act as the quarterback for you and your project.
This means that the project manager will assume ownership of the project from inception to completion, help organize and lead the team that will serve your specific needs and work to see the entire process through successfully.
A project manager will help you determine which spaces will work best for your firm, provide preliminary budgets to help the site selection and renovation process, schedule the project from design to completion, help with building permitting and soliciting vendors, selecting contractors and hold jobsite meetings throughout construction.
By handing the reins of the day-to-day scheduling, vendor management and construction oversight to a project manager, your time is free to focus on your business.
A project manager’s number one goal is to ensure that your project delivers on time and on budget, without compromising the quality of the work.
A project manager will work with you from before your lease is even signed to begin putting together preliminary budgets and schedules, in order to set expectations from the very beginning.
They will then help you enlist trusted and reputable vendors, including architects, general contractors and more, that have a track record of success. Your project manager will also competitively bid out your project so that you get the most competitive price.
A good project manager will have strong vendor relationships as well as years of experience in the industry that he can leverage to ensure that no time or money is wasted in the delivery of your project.
Not only will a qualified project manager save you money, but the savings they bring to the project should far outweigh the cost to hire them.
3. Mitigate any problems that arise.
With years of experience under their belt, your project manager should have a solution at the ready for any issue that may pop up during your build-out process.
From standard value engineering to innovative solutions to help expedite your project should an unexpected cost or an issue with the schedule arise that cannot be avoided, your project manager should have a number of ideas of ways to save money and/or get your project back on track without out compromising on quality.
Hosting a Cinco de Mayo party this weekend? Or looking for the perfect dish to bring to a friend’s get together? No matter the crowd, we’ve pulled six Tex-Mex recipes from our AQUILA Eats cookbook that are sure to please.
In this article, you’ll find the recipe for a tasty salsa, kickin’ tortilla soup, fish tacos and three takes on the Cinco staple, the margarita. Enjoy!
Three Recipes to Cook for a Crowd on Cinco de Mayo
Serve with chips for the perfect snack to go along side a margarita. Need a margarita recipe? We’ve got you covered below.
Place the lime juice, blackberries and green chiles in a bowl.
Using a muddler or immersion blender, muddle/blend until fully combined. The smoother the better.
Pour the blackberry mixture through a fine mesh strainer, and remove the seeds.
Pour the mixture into a pitcher, followed by the blackberry brandy, orange juice, tequila and agave. Stir to fully combine.
Combine sea salt and chili powder (equal parts) on a plate. Dip the rim of each glass in water or lime juice and then submerge in the salt/chili mixture.
Serve with fresh blackberries, lime wedges and jalapeños.
Hopefully, you’ve found a delicious recipe to share with your friends and family this weekend. Found something you want to save for later? Be sure to bookmark or pin to your Pinterest so you can come back another day.
All of our recipes are straight from the kitchen of our employees, so be sure to let us know what you think when you taste them! We love sharing our kitchen with yours.
After assisting hundreds of clients with their lease renewals, our AQUILA tenant rep team knows the value that can be achieved by going through the process early. We also know that renewing early isn’t the right decision for every company.
In order to help you decide what the right timeline is for your company, we’ve put together this list of three reasons to (and three reasons not to) renew your lease early.
When to Renew Your Commercial Lease
The Standard Lease Renewal Timeframe
Renewals are typically speedier transactions than signing new leases, but it is still recommended to go through the process of surveying the market to best understand the deal points of a renewal (and gain the most leverage from your landlord).
In order to allow for time to go through the market survey process and to negotiate your new lease, typical renewal timelines follow this general timeline:
For tenants over 25,000 sf, 18 – 24 months is considered normal given the low inventory of available spaces at this size.
For tenants in the 10,000 – 25,000 sf range, it is standard to start the renewal process about 12 months prior to expiration.
For tenants under 10,000 sf, the process typically begins 6-12 months before your lease expires.
What it Means to Renew Early
Early can mean different things for different tenants. Typically, larger tenants need to start the renewal process sooner than smaller tenants.
Depending on your size, an early renewal might mean speeding up the above timelines by 3 – 6 months, but can in some cases mean accelerating the timeline by multiple years.
Three Reasons to Renew Your Lease Early
1. To Lock in Your Rental Rate
If your are in a competitive real estate market that shows no signs of slowing down, it can be a savvy move to renew your lease early and lock in the current rental rates, rather than the future rates that will likely be much higher.
By renewing your lease early, you can lock in today’s lower rates so your business isn’t faced with higher market rates years down the road when your renewal options actually hit.
2. To Get Tenant Improvement Dollars to Renovate Your Space
If your office space is in need of renovation, beginning the renewal process early may give you the leverage required to negotiate the tenant improvement (TI) allowance you need.
A tenant improvement allowance is money from the landlord that you, the tenant, can use renovate your space.
By renewing early, you may be able to negotiate a TI allowance that will give you more opportunity to renovate and improve your office space to better fit your company, without coming out of pocket for the expense.
Typically, less TI is allotted for renewals. However, landlords value when keeping their buildings occupied and avoiding any potential time vacant. By ensuring the landlord early that you will stay in your space, they may be more likely to give you concessions such as a TI allowance during your renewal in return for additional lease term.
Additionally, your tenant rep broker may recommend you look at other spaces on the market in order to create leverage. Your landlord may be more likely to alot you concessions in an effort to keep you, if they think there is a strong likelihood you will vacate at the end of your lease.
If your company is growing at a quick rate and you need to expand your office space to accommodate all of your employees, then renewing your lease early might be the right choice for you.
Often, it makes sense to renew your existing lease at the same time you expand into additional space, in order to make the leases coterminous.
Assuming the landlord has the space for you to expand, this could be the perfect solution for your growing company. It takes away the inconvenience of relocating and might even get you a good deal on the rate of the expanded portion of the office.
Additionally, if you’ve recently downsized or your company has not grow as quickly as you had previously anticipated, and you no longer need your full space, a savvy tenant rep broker may be able to work with the landlord in order to help you right-size your lease during an early renewal. If this can be negotiated, it can help you save thousands of dollars in rent on unused space.
Three Reasons Not to Renew Early
1. To Receive Lower Rates in the Future
If you are currently paying above market rental rates, and are in a market that is on the verge of slowing down, then renewing early might not be the best option for you.
If demand is starting to slow down, then rental rates may begin to decline in the near future. In this situation, it likely makes the most sense for you to wait to renew until after the market shifts in order to avoid paying above-market rates.
2. To Find a New Space That Can Accommodate Your Company Size
Let’s say your company is growing faster than you ever anticipated. Sales are going through the roof, and you need more employees to maintain the speed at which your business is running.
If your current office space cannot hold the number of employees you expect to have in the near future, and there will not be enough space available in your building to accommodate your growth, then you will likely not want to renew your lease early.
In this situation, you may still want to engage a tenant rep broker early in order to determine the best options for you. If you are open to having multiple locations, then you may want to renew this lease and begin the process of finding a satellite office. Or, if you prefer to keep you office in one location, it is time to begin the search for a new, larger space.
Of course, this can work the opposite way too. If your company is shrinking and the landlord will not allow you to right-size now, then renewing the existing lease of the larger office space would be a mistake. Instead, it likely makes the most sense to sublease any excess space and either renew at a smaller size during your renewal period or terminate your lease and relocate to a location that better fits your needs.
3. To Find an Office Space That Better Fits Your Company
If you don’t foresee your office space as a long-term home for your company, and you don’t intend to remain in the space, then logically it does not make sense to renew early.
There are a number of reasons that you might want to move office spaces. These may include, but are not limited to:
Location: You might want to find an office that is more convenient for your employees or your customers. Or maybe you’re sick of the congestion in your area, and would prefer to relocate to a more scenic location in the suburbs.
Amenities: If your office is in an area that doesn’t have any good lunch spots, and you’re tired of eating that same homemade turkey sandwich everyday, you may want to find a new location with plenty of surrounding restaurants or an on-site cafeteria.
Parking: Parking in Austin is a hot commodity, if your company has high density, you may be running into parking constraints at your current office and need to find a location with more flexibility.
Rising Rental Rates: Many companies are beginning to look to Southwest Austin or The Domain as an alternative to Austin’s CBD, as the rental rates have risen so dramatically that they cannot afford to renew at the new market rate.
What This Means for You
Renewing your lease early can give you the satisfaction of having an office space for the future. It can save you money if market rates are increasing, can lead you to receiving a larger tenant improvement allowance, and may even be the right solution for an expansion if you have one planned. However, it’s not for everyone. Companies that have higher than market rental rates, are growing at a rate their landlord can’t accommodate, or do not see their current office as a long-term home should not consider renewing their lease early.
A qualified tenant representation broker can help you evaluate your company’s specific situation, and determine what approach might be right for you.
3 Reasons to Hire a Tenant Rep Broker for Your Lease Renewal - YouTube
One of AQUILA’s youngest brokers to be named principal, Ben Tolson is hard-working and the head of the AQUILA asset services team. When he’s not at work, he’s either on the golf course or spending time with his wife, Katie, traveling, trying out new restaurants or walking their beagle, Birdie.
An Austinite since 2006, Ben knows the market like the back of his hand. A consistent Austin Business Journal Heavy Hitter since 2010, he is persistent, strategic and always thinking ahead. He works toward strategies that are best for his clients and their properties tomorrow, next year and ten years down the road.
Watch the videos and read my Q&A with Ben below to learn more about him.
Get to know Ben Tolson, AQUILA Principal - YouTube
Let’s Start With the Basics:Q: Where did you grow up?
A: I moved here in 2006. There was an opportunity here, it was a change of pace and climate. And, more importantly, it was really clear what a dynamic city Austin was – and now still is. I wanted to be a part of its future in some small way.
Q: What is it about Austin that has made you stay?
A: Austin feels like home now. It doesn’t have any deficiencies, and you don’t have to sacrifice quality of life. It’s an easy place to live, and it’s just a great place to make your home and run your business. There’s a strong work force, many opportunities, fun distractions and, again, a good quality of life. The weather is great and you can be outside year round. There’s also a revolving door of festivals and events, and with so much popping up, you could eat at a new restaurant seemingly every day.
Ben enjoys being outside and playing golf.
Q: What is your favorite part about working for AQUILA?
A: Like Austin, it’s like a second home, an extended family. There’s a ton of potential and opportunity; we are young still and it’s fresh and interesting. Demand is always changing so the solution is always changing – it’s enjoyable.
Ben with AQUILA coworkers during a trip to Vail.
Q: What makes AQUILA different?
A: It’s fun to come to work. We have lots of personalities here, and everyone respects everyone. With AQUILA, you get more. You have the whole firm at your disposal, and we do great market research; you get the resources of our whole company. We put an emphasis on collaboration, which is something I think we do better than anyone else out there.
There’s no place quite like Austin, Texas. At AQUILA, we love living in the “Live Music Capital of the World” and exploring all that our incredible city has to offer.
With countless events and local must-do’s, it can be tough keeping track of exactly what’s happening each month. That’s why we’ve pulled together our Austin expertise for this comprehensive month-by-month guide to all the major annual events that take place in Austin.
From New Year’s Day to New Year’s Eve, there’s something for everyone year round. Events include food and music festivals, races, shopping bazaars and more.
This decades-old tradition continues. Splashing into the 68 degree water of Barton Springs pool (which is usually warmer than the air at this time of year) is a favorite way for Austinites to dive into the new year!
First Thursdays take place each month along South Congress Avenue. Photo courtesy of TripSavvy.
Make sure to visit the iconic South Congress strip on the first Thursday of every month. Relax and enjoy drink specials, discounts, and live music. Shop until you drop with local vendor pop-up shops and stores open until 10PM. The South Congress Hotel also hosts a live DJ and food trucks.
When: January 4, 2018, continues on the first Thursday of every month
Known as the “fast half”, the 3M Half Marathon hosts over 7,000 runners and leads them throughout Austin’s greatest sites. The participants run through Austin’s weirdest and most-loved neighborhoods, The University of Texas’ campus, and the Capitol. There is live music and the Longhorn Band as well as plenty of food trucks to enjoy at the finish line!
When: January 21st, 2018
Where: Start line: Capital of Texas Hwy, near the Arboretum; Finish line: Texas State Capitol
Every January and August, hundreds of Austinites line up to get incredible deals on clothes, accessories, home decor and furniture from 80+ local businesses. Top-tier boutiques and local stores bring their signature selection and excess inventory together under one roof. Enjoy bargain hunting while enjoying coffee, cocktails and a high energy atmosphere.
When: January 27-28, 2018, typically the last weekend of January
The Austin Marathon starts and ends in front of the Texas State Capitol Building. Photo courtesy of Larry D. Moore.
This is the Superbowl for Austin runners! See the iconic landmarks such as the UT Tower, the “I Love You Mural” and Lady Bird Lake while traversing a number of Austin’s most iconic neighborhoods such as South Congress and Hyde Park.
Cheering crowds encourage the athletes throughout the race, but are especially loud as the runners close in on the finish line in front of the Texas State Capitol on historic Congress Ave. If running’s not your speed, grab some friends, a cup of coffee and a cowbell to join in on the fun.
The Austin Marathon has grown to become the 25th largest marathon in the USA, attracting top endurance athletes from around the globe. But don’t worry, there are plenty of tutu-clad athletes just in it for the story and the unique belt buckle medal!
When: Sunday, February 18th, 2018
Where: Start & Finish Line: Congress Avenue
Uber is often jammed in the morning before the race (some runners reported 30 minute waits!), so allot enough time to to get to the starting line, or ask a friend or family member to take you.
Also, many nearby restaurants give discounts to participants who come in for brunch after the race. Wear your medal with pride and be sure to ask your server if they have any specials!
Whether you like your oysters raw, grilled, roasted or fried, the Austin Oyster Festival has an oyster for you. Various seafood, wine, craft beer and specialty cocktails are also available, which, paired with live Cajun and bluegrass music, makes for a great afternoon.
The Austin Kite Festival is an spring tradition in Austin. Photo courtesy of abckitefest.org.
The ABC Kite Festival in Zilker Park offers activities for all ages, including the traditional kite flying contest, a fun run and a children’s music concert called Moss Fest.
Swing into spring and join thousands of Austinites at Zilker Park for a free, all-day event filled with kite making and flying.
Originally founded as a kite contest in 1929, this annual kite festival was designed to spur creativity in Austin children and is now one of the country’s longest running festival of its kind. The ABC Kite Fest is one of Austin’s most beloved, family-friendly traditions.
When: March 4th, 2018, typically the first Sunday in March
Where: Zilker Park
Even if you don’t bring a kite, this festival is the perfect excuse to pack a picnic and enjoy the sunshine with friends or family.
SXSW is a world-renown film, interactive technology and music festival that takes over downtown Austin for 10 days. It attracts hundreds of thousands of creative and curious minds alike. The overall festival is actually divided into three main micro festivals, SXSW Interactive, SXSW Film, SXSW Music.
Exhibitors from around the world give a glimpse of the future at the Trade Show and Technology Exhibition Hall while speakers provide insight on a wide variety of trends and topics in numerous TED Talk style sessions. Explore sessions that dive into brands & marketing, design, code & programming, government, health & wellness,intelligent future, style and workplace.
The Film Festival celebrates raw innovation and emerging talent from both behind and in front of the camera. Featuring dramas, documentaries, comedies, genre standouts, and more, the festival has become known for the high caliber, diverse films presented, and for its enthusiastic audiences.
SXSW Music features live music at venues across downtown Austin. Photo courtesy of SXSW.
Each year the SXSW Music Festival hosts a curated mix of artists performing in bars, clubs, parks, churches, hotels, and more. Hundreds of up-and-coming music artists play at venues all over the downtown district from early afternoon late into each night. Not limited in genre or regional focus, audiences can enjoy a variety of musical styles.
When: March 9-18, 2018
Where: Downtown Austin
Outside the event, hundreds of unofficial events, parties and networking goes on throughout the week. If you get an invite – go! These are great opportunities to connect, see the local side of Austin, and have fun.
Also, with so many people downtown, rideshares can be hard to come by or may have a surge fee. If you’re a local, it may make more sense to drive yourself – the parking garages near the convention center often have open parking spots if you get there in the morning.
Austin hosts one of the Top 10 Pro Rodeos every March. Top-ranking athletes in bareback riding, steer wrestling, roping and mutton-bustin’ compete nightly for the championship.
Following the the rodeo events each night is a concert from chart topping country artists (and more). 2018 performers include Dwight Yoakam, Josh Turner, and the Beach Boys. Come early to partake in the fairgrounds, the livestock show, a petting zoo, pony rides and much more for the whole family.
When: March 10-24th, 2018
Where: Travis County Expo Center
If you’re headed out with a large group, it can be a time and money save to rent a bus because parking can be tricky/expensive!
And be sure to use the opportunity to wear your cowboy boots or other closed toed shoes, as much of the fare ground is dirt.
The Dell Match Play World Golf Championship is played at the Austin Country Club overlooking Lake Austin. Photo courtesy of Dell Match Play.
One of the most prestigious PGA Tour tournaments in the world, Dell Match Play is where you can find many of golf’s brightest stars on one course. After previously being held in San Francisco and Arizona, the tournament made the move to Austin in 2016 and plans to remain at the Austin Country Club through at least 2019. The Dell Match Play is a unique experience – with Lake Austin as the backdrop, the weekend attracts golf lovers and socialites alike.
When: March 21 – 25, 2018
Where: Austin Country Club (4408 Long Champ Drive)
Getting a rideshare at the end of the day is hard to come by. For easy access to and from, coordinate a ride with a friend or family member beforehand or recruit a group to rent a shuttle.
Horseshoe Bay Resort’s annual Balloon Festival is a treat for the whole family! The festival brings over 20 beautiful hot air balloons, plus local Hill Country wine vendors, live music and entertainers for a weekend full of fun. There are additional activities for resort club members and guests, including an Easter egg hunt on Easter morning.
When: March 31st-April 1st, 2018, usually falls on Easter weekend
Where: Horseshoe Bay Resort (45 minutes west of Austin)
Great Easter weekend for the family! While the kids play, adults can enjoy the VIP party and lunch tickets.
The Round Rock Express is Austin’s premier baseball team. As an affiliate of the Texas Rangers and founded by none other than Nolan Ryan and family, this team is primed for Texas lovers and locals alike.
When: April 2nd, 2018, with games continuing through September
Austin Fashion Week is one of the largest fashion events in Texas. Photo courtesy of Community Impact.
Fashion X Austin is the largest week of fashion events in the state of Texas and the 4th largest fashion week concept in the United States. Fashion X features events hosted by boutiques, retailers, salons, spas and gallery spaces around town. With most events free and open to the public, you are able to party hop across Austin and while visiting trunk shows, mini runway events, designer showcases and more.
The Statesman Capitol 10K is the largest 10K race in Texas and one of the top 10 in the nation. Whether you’re a seasoned runner or a beginner, the Cap10K is a rite of spring in Austin since 1978. Costumes are welcome, so come participate in your favorite superhero get-up with family and friends!
When: April 8th, 2018
Where: Start line: Congress Ave; Finish line and festival: Vic Mathias Shores
It is always fun to participate in the costume contest with family or friends- tutus are always a big hit!
Unplugged at the Grove is one of Austin’s classic free live music events. Photo courtesy of KGSR.
For 25 years KGSR has hosted Unplugged at the Grove with free live music every Thursday evening at the iconic Shady Grove on Barton Springs Road. Make this your weekly summer ritual! With 23 consecutive weeks of the best live music, food, and fun you’ll experience under the warm skies of Austin, you can’t go wrong.
Did we mention there is no cover charge? All ages are welcome to attend, and 21+ can enjoy drink specials.
When: April 12, 2018, continues most Thursdays through September
Where: Shady Grove (1624 Barton Springs Rd)
Get there early and bring a blanket or lawn chairs so you can get a spot on the lawn. It fills up fast, especially when there is a well-known musician playing. Rideshare or carpool because parking can be tough!
There’s something for everyone at the Bluebonnet Festival! The festival is held in Burnet, Texas (just 75 minutes outside of Austin) and is known as the “most exciting small-town festival in Texas”.
The annual Bluebonnet Festival features live music, a parade, a 5K and 10K Fun Run, pet parade, demolition derby, car show, gunfighters old town shootout, duck derby, bike decorating contest, weiner dog race, wildflower show, arts and crafts, and more (if you can believe it!)
When: April 13-15 2018, always the second weekend of April
The Austin Reggae Festival is the event for the Reggae or world-infused music lover. While showing your support for the genre, you can also help raise funds for the Capital Area Food Bank, visit artisan vendors and purchase unique gifts. This Reggae-filled event promises to inspire guests with uplifting music that serves to teach a message of community support and peace.
Many of the world’s top motorcyclists venture to Texas for the Red Bull Grand Prix of the Americas. Photo courtesy of Chad Wadsworth.
Circuit of the Americas (COTA) hosts the only North American round of the world’s premier motorcycle racing championship, drawing many of the world’s best motorcyclists to Texas. Austin’s keen love for motorcycles coupled with COTA’s cutting edge racing facility ensures that audiences can expect a fun-filled weekend of world class two-wheeled excitement alongside an incredible schedule..
When your company decides it’s time to search for commercial space, it can sometimes be difficult to decide between leasing and buying. There are pros and cons to each option, and what’s best for your company is largely dependant on your company’s needs and expectations for the future.
We at AQUILA like to arm our clients with as much information as possible before they make their commercial real estate decisions, so whether you are in need of office, retail or warehouse space, we’ve compiled an overview of pros and cons of both leasing and buying your commercial space to aid you in the decision-making process.
Leasing Your Space: Pros & Cons
Benefits of Leasing Space
For most tenants, leasing makes the most sense. Here are some of the benefits of leasing a space versus purchasing a property:
No Down Payment
When purchasing a property with a traditional loan, you must put down a large payment, typically 10 to 40 percent of the total value.
When leasing a property, you generally only have to put down a security deposit, typically a much smaller total cost than a down payment. In Austin, you will often see landlords asking for a security deposit equivalent to one month’s gross rent, dependent upon other factors such as TI allowance and tenant credit.
Leasing a property frees up a lot of capital that you would’ve spent purchasing a property, and instead allows you to invest in your business or to build out your space.
In any lease versus purchase analysis, the business owner should factor in the cost of capital and/or opportunity cost from investing in real estate rather than in their business.
Landlord Manages Repairs and Maintenance
When you lease space, the landlord is generally responsible for common area maintenance, including things like building repairs, HVAC and plumbing maintenance, etc. The landlord typically has a professional property management and engineering team that will handle matters, from tenant complaints to property wide issues, on a day-to-day basis.
Owning a building comes with many issues that don’t pertain to your company, and dealing with such issues takes time and money. Leasing your office space allows you to focus solely on running your business and saves you the worry of managing the building, leaving the property management and maintenance to the professionals.
That’s not to say that the landlord manages these items for free. When you lease your space, these expenses are usually included in your gross rent, as a portion of the operating expense called Common Area Maintenance expenses.
Access to Desirable Locations
Most of the time, leasing a property offers you the opportunity to be in a more desirable area than you would in an owner-occupied building. Because substantial development has typically already occured in these more desirable areas, the values of available buildings or land are going to be higher, often times pricing out potential owner-occupants.
Additionally, owner-occupants typically need buildings that are smaller than traditional multi-tenant buildings, which are often 100,000 sf or larger. There are far fewer small buildings to choose from that currently exist in the market. When considering purchasing land to build your building, it is important to know that land prices are based on the assumption that the purchaser will be constructing the largest building permitted per city zoning. This maximum size is often much larger than a particular user might need, thus making it unaffordable.
Leasing space in an existing building in a desirable location is typically the solution for users who place priority on location. On the other hand, if your company is less concerned with prime location, there may be attractive purchase options along with leasing options.
Room to Grow
The greatest factor in choosing to lease is flexibility.
If you are a growing company, leasing offers a far easier method to accommodate growth than buying. You can build in expansion options within your lease, where you have the have first rights (also known as the “right of first refusal”) to acquire space that comes available within your building as your company needs it.
With buying, your choices are usually limited to the size of the property purchased or the zoning restrictions of the site you choose to build on.
Disadvantages of Leasing Space
Cost Variability Upon Renewal
The biggest risk associated with leasing a property is the potential increase in rent that a landlord might ask for when it comes time to renew.
This can create a lot of trouble for your business because it requires you to renew your lease at a higher rate which could effectively force you to move your business to a different location or downsize if you’re not willing to pay the higher cost.
If you do eventually leave your space, remember that any improvements that you’ve made to the space will directly benefit the landlord.
This means, that if you come out of pocket above your TI allowance for hard cost improvements (countertops, wall finishes, plumbing additions, etc.) that can’t be moved to your next office, all of that added value will go to the landlord on your dime.
Purchasing Your Office Property: Pros & Cons
Benefits of Owning your Own Property
In certain cases, it can make sense for a business to purchase an existing building or land to build on. Some of the benefits to owning your own property include:
Opportunity to Build Equity
Buying a building will provide your company with an investment that allows you to build up equity over time as you pay off the mortgage and as the property appreciates in value.
This equity can eventually be used as collateral for leverage if you decide to expand your business.
AQUILA PRO TIP
In unique situations, a creative broker could potentially help you negotiate equity into your lease if that is important to you. That said, this is not very common and the opportunities to do this are rare.
Fixed Mortgage Payments
The financing associated with your property typically remains fixed.
When taking out a long-term loan (assuming it is a fixed rate loan), your debt service payments will remain fixed and never increase during the loan period.
Furthermore, there is a notable advantage to putting your money into paying off a mortgage, rather than a monthly rent, as you are slowly gaining equity, rather than just lining the landlords pocket.
This is especially true in a competitive market such as Austin, where rental rates are at all time highs.
The cost of owning a commercial space can offer you additional tax deductions in the form of mortgage interest, property taxes and other accounting line items.
Additionally, nonprofits can achieve additional tax benefits by purchasing property rather than leasing.
Generate Additional Income & Accommodate Growth
Probably the most obvious and beneficial aspect of owning the property is that you can lease some of your property to other tenants to generate additional monthly income and cash flows.
This is also a good way to allow for future growth. For example, say you only need 75,000 sf today, but know you plan to grow to an additional 25,000 sf over time, you could purchase a 100,000-sf property and lease out the additional space to another tenant(s) during the interim time.
Improvements Add Value to Your Bottom Line
Unlike with leasing, any renovations that you make to the space will only add value to your bottom line in the long run.
And, as you are more likely to remain at the property for an extended period, you will not have to recreate these improvements as you move from location to location.
This can be a major cost savings, whether you are a manufacturer that requires a number of generators and machinery to be installed for operation or a law firm with top-of-the-line finish out requirements.
Additionally, any capital improvements that you make on the property will also add to the property’s overall value.
Disadvantages of Owning Your Own Property
Lack of Flexibility
Buying a property or space creates a lack of flexibility for your business. If your business outgrows the space in the future, then you might be forced to lease or buy a new space.
While you have the same risk with a lease, there is more flexibility in the lease in that you can easily reevaluate your real estate needs at the end of your lease term (or even in the middle of your lease) and find a new solution that will better fit your new requirements.
Significant Upfront Cost
One of the other primary cons in buying your own commercial space is the large initial upfront costs.
There are many different upfront costs that a purchaser must face. Some of these upfront costs may include:
Initial Equity Required by Lender (Down Payment)
Capital Improvement Costs
The significant nature of these costs is often the main reason that companies don’t own their own real estate as that money is better spent re-investing in their businesses.
Responsibility for Repairs, Maintenance and Taxes
Being in charge may be a benefit but can also be a deterrence.
When you purchase a property, you’re now the one responsible for all the repairs and maintenance that a landlord would usually handle.
And if you don’t think you have the time or resources to handle these duties yourself, you most likely will have to hire a property management company or full time facilities team, which will cut into your profits from owning the property.
Additionally, a common misconception is that owning your own real estate will eliminate the ever-increasing operating expenses that you likely pay on your leased space. Operating expenses are made up of three main components: insurance, CAM expenses and property taxes.
In Austin, the recent dramatic increase in operating expenses can be credited almost entirely to the increased tax assessments. So, while owning the building certainly helps control certain costs, you are still going to face the rising tax rates as a part of your real estate costs.
If you purchase a property that is larger than your current requirement or a land parcel that you do not plan to develop to its full potential day one, you run the risk of carrying this additional value.
Whether or not you are maximizing the use potential of your property, you will still be required to pay property taxes and insurance fees on the full estimated value.
With a building, you can recoup these costs by leasing out extra space. This once again puts you in the position of either having to spend time playing landlord or hiring a brokerage team to market the space.
Should You Lease or Buy Space?
The answer to whether you should lease or buy office space is not clear-cut or easy for most business owners.
Your decision will hinge on a combination of financial, tax and unique company factors.
If your company is stable with little plans for growth and has large amounts of cash on hand, purchasing your property may make sense. On the other hand, if your company is rapidly growing and tends to reinvest cash into the business expansion or development, leasing space is likely going to be the right answer for you.
As you contemplate this important decision, you should not only consult your accountant and a financial planner, but be sure to discuss your situation with a qualified commercial real estate expert.
If you’re considering buying or leasing office space, one of our tenant representation experts would be happy to talk through this decision with you and help you identify the solution that will best meet your company’s needs.
To talk to a member of our tenant representation team, schedule a consultation today.
The spring rainy season can be an expensive time for property owners if not properly prepared. Spring’s heavy rains can bring flooding, roof damage, pavement damage and more.
Our AQUILA Property Managers have seen it all and have proper measures in place at all of our AQUILA-managed properties to ensure rain-damage is kept to a minimum.
In this article, we’ll share five tips to make sure your commercial properties are fully prepared for spring showers.
1. Properly Patch Parking Lots and Paved Areas
If your property’s pavement is not properly maintained, heavy rain and storms can further exacerbate any existing damage. What would have been a small patch, can grow into a much larger and more expensive problem, either requiring a much larger (i.e. more expensive) patch or potentially requiring you to resurface the lot all together.
Inspect the Property Regularly
Be sure to regularly inspect your property’s parking lots and paved areas for potholes or allegatoring.
Pot holes can arise quickly, so it is important to regularly inspect your parking lots.
Your on-site maintenance team can help you keep an eye out for pavement damage, but nothing can beat a regular weekly or monthly inspection from the property manager.
And be aware, things can change quickly! Even if you recently inspected a property, tenants on site may be the first to notice new damage.
It is important to be responsive and act quickly on any damage reported by tenants at the property. Small damage today can quickly escalate if not addressed.
Cold-mix should only be used as a temporary solution. If you need to seal up the damage today, this can tide you over until a more permanent hot-mix patch can be installed.
You should not, however, plan for cold-mix to be your final fix. Cold-mix patches are a cheap solution, but do not last long and require constant re-patching.
Hot-mix is the proper way to patch your pavement. While the upfront cost is slightly higher, the repair will far outlast a cold-mix patch, meaning you will actually save money in the long run.
2. Regularly Inspect and Repair Your Roof
Extreme temperatures (such as summer heat in Austin) can be rough on roofs.
Additionally, heavy precipitation can result in erosion and cracking, and even the regular treading of maintenance teams overtime can cause wear-and-tear on your roof.
The real trouble starts when cracking occurs during heavy rains (or when heavy rains hit and expand an existing crack). This crack will let water into the suites below, leading to leaks, flooding, mold and (most importantly) unhappy tenants.
In order to avoid this damage, our property managers recommend you have your roof inspected annually, and be sure to make any recommended repairs.
By catching issues early and making the repairs on time, you will:
Save money on repairs, by making them while the issue is smaller.
Extend the life of your roof (often 5 -10 years past the warranty), and save money over the life of your investment, by replacing the roof less often.
Avoid costly damage from water leaking into the building.
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Older roofs require a slightly closer eye than newer TPO and rubber roofs. These new roofing technologies help prevent cracking and alleviate some of the regular wear-and-tear, although regular inspections are still recommended.
If you’re considering replacing the roof on your property, it will likely benefit you to look into these new roofing materials. They do cost more initially, but they will save you money on maintenance, repairs and replacement over the life of the roof.
3. Clear Out Your Gutters
While it is important to regularly maintain your gutters, it is especially important to clear them out before a big storm.
When you see a storm or heavy rains on the forecast, it is important to get the maintenance team to perform a thorough inspection of all of the gutters on the property.
With the rain storm typically comes a downpour of leaves and other debris. If the gutters aren’t cleared out they are likely to clog and limit the water that can drain off of the roof.
Best case scenario, you have a messy job on your hands, clearing out the gutters after-the-fact.
Worst case scenario, water leaks into the property through the roof and into tenant suites, resulting, once again, in flooding and unhappy tenants.
4. Maintain and Inspect Joints and Windows
Flashing, joints, sealant, windows, etc. Anywhere two planes or surfaces come together, there is potential for leaks. And where there are leaks, there can be mold.
These leaks can be caused by the wear down of a material over time, shifting of the property or simply from daily use. They usually start off as minor, so when caught early, they aren’t a major issue.
Your property managers and engineers should regularly inspect these points during a monthly inspection of the property.
AQUILA PRO TIP
AQUILA property managers recommend bringing in an third-party once a year (we typically rotate property management team members across properties) in order to have a set of fresh eyes on the site.
5. Know Your Problem Spots & Be Prepared
If your property has a history of leaking in a certain spot, be sure to have your engineers on-site and on-call when a storm arises.
Call the tenants ahead of time to let them know you’re prepared to address any issues, and check in during or after the rain to see they’ve encountered any issues.
And if an issue does arise, be prepared!
It is important to have a list of vendors ready to go to address any rain-related issues that can come up. These vendors include:
Concrete and asphalt vendors
Maintaining a good relationship with these vendors will allow you to quickly and easily resolve any issues that may arise during the rainy season.
Hopefully this list will help you keep your property prepared for spring showers. If you have further questions, our AQUILA Property Management team would be happy to chat: schedule your consultation today.
We invited professional commercial real estate photographer Scott Mason of Scott Mason Photography to explain the benefits of having professional photos of your real estate property. When it comes to property photos, Scott is our go-to-guy, so we are excited to share his expertise on the topic with you.
Have you considered using professional photography for marketing your commercial real estate properties? The strong first impression made by outstanding professional photography is a highly valuable asset. It can be implemented across all your marketing materials, from brochures and online listings to email blasts and more.
Having worked with AQUILA for many years, I know that they highly recommend hiring a professional photographer to help you meet all your marketing and sales needs. This article will tell you why – and how – to hire professionals for your property photography. In many cases, if you’re only going to invest in one marketing initiative, this is the one to pursue.
This article will help you understand:
Four benefits of professional photography
Why to hire a professional vs. doing it yourself
What to look for in a professional photographer
Standard pricing for professional photography
4 Benefits of Professional Photography
1. Quality photography makes for a crucial first impression.
You’ve probably heard the phrase, “You never get a second chance to make a first impression”. This is especially true for visual marketing.
Before prospective tenants schedule a tour, they are likely to search for the property online. How do you want your prospects to react to your listing? Think about the last time you landed on an outdated web site or a listing with poor quality photos (or worse, no photos at all). What was your immediate impression? Did you move on to something better? (You might have forgotten about it already!)
For your property to be taken seriously and make a positive impression on potential buyers, up-to-date, high-quality photographs are crucial.
2. Striking photography will impress and excite potential tenants.
Humans are visual animals. Whether you’re browsing the web for a new pair of shoes or searching office listings for commercial real estate, your enduring judgement in any decision-making process online is made in the photography. According to The Wall Street Journal, buyers spend 60% of their time on a property page looking at the listing’s photos.
In Austin, the market is saturated and the competition is fierce.
If you lack strong, positive images of your property, you could lose out big-time as potential tenants’ attentions are drawn to more attractive listings. Why lose out to competitors simply because they leverage the value of professional photography?
3. Professional photos will impress current tenants/clients.
If you’re a property manager, you are already showing your tenants and clients how much you appreciate their business by giving them your attention and care when they’re in need of help. You wouldn’t harm their image by letting old paint flake off the walls in their office, so why would you harm their image by showcasing unflattering, outdated images of their space?
Appearances are an essential part of the equation when representing tenants. Do your tenants a favor and show them not only that your management company is competent and responsible, but that you care about the appearance of their property as well.
4. Your property will get more views and shares.
If potential tenants/buyers are captivated by visually pleasing photos, they are much more likely to click on the listing due to visual interest. Photos with the right elements of composition create interest by leading the viewer’s eye around the image, resulting in more time examining. (This has been proven scientifically!)
Hiring a Professional Photographer vs. Doing it Yourself
You know real estate. Photographers know photography.
The skills that serious architectural (or real estate) photographers acquire can take years to master, and that’s a lot of time that busy real estate professionals simply don’t have. Anyone can occasionally get lucky and capture a decent image with a cell phone, but “decent” and “occasionally” aren’t reliable enough.
Non-professionals don’t deal with the timing issues, skills and equipment professional photographers must master. Some of these include:
Planning exposure of all sides of buildings and interiors relative to time of day / angle of sun.
Camera positioning, exposure, depth, etc.
Interior lighting with and without flash to reduce glare and improve color. (Many interiors’ true colors can’t be revealed without flash.)
Processing of images: A single high-end photo could take an hour or more plus years of Photoshop experience to produce a high-quality architectural image.
The two images below are examples of how timing can impact an image. The image on the right is more attractive because it was taken at a time of day when colors tend to “pop” more. The image on the left could have worked out, but careful planning for sun’s angle would have needed to be implemented. Harsh shadows are another thing that professional photographers are used to working around, both through timing and in post-processing (photo editing).
Make an investment that makes sense.
We all spend money to make money. Marketing investments are an everyday necessity for almost any business, large or small. While it will take some time to sit down and calculate your ROI, you’ll be pleased when you crunch the numbers on your investment in photography. Many companies (AQUILA included) have seen an immediate response from improved photography quality.
Think of professional images as less of an add-on expense and more of a smart investment.
Things to Look for in a Professional Photographer
The barrier of entry for a top professional photographer is more than an expensive camera. You need to find a pro who not only owns the equipment and has mastered their craft, but is a good communicator and runs a qualified, insured business.
Each photography discipline (real estate, portrait, wedding, sports, etc.) has its own unique rules and skill sets, so it’s a good idea for a property owner to hire a photographer who specializes in real estate or architectural photography. Dedicated architectural specialists are familiar with:
The right angles and positions
How to make sure there is no glare or reflection on glass surfaces
Other “tricks of the trade” essential to make a property look its best
Simply put: You know how to sell a space, and the right photographer can expedite that sales process by bringing their own unique skills to the space. Find the one that works for you.
Tips for Choosing the Right Photographer
The standard price for photos depends on the market you are in and the skill/experience level of photographer you are working with. In Austin, high-end commercial property photos can cost anywhere between $60 and $200+ per photo license.
Some properties may only need a handful of photos (exterior, lobby, common areas), while properties with big blocks of available space and many amenities may require more.
Pricing structures can vary by photographer too. Some photographers may charge a session fee (often called a “day rate”) in addition to their per-photo price, while other photographers will have one flat fee for a set amount of photos.
“Real Estate” And “Architectural” Photographers
Generally speaking, most “real estate” photographers are dealing with high volume and will get the job done cheaper and quicker, but with a lower standard of image quality. “Architectural” photographers tend to have higher price points, but also spend more time perfecting the images and delivering higher quality (think of interior magazine photos).
Gathering Quotes / Budget
As with most things, it’s never a bad idea to get multiple bids. Balance your budget against the quality you require. Increasing your budget will often produce higher quality images – if you hire the right photographer.
When hiring a new photographer, always ask beforehand about policies on image rights.
To cover your bases, request rights for both the property owners and the brokerage company to use in any format, and ask for a contract that lays the copyright terms out in plain language. This will save you from future potential headaches. If the photographer has restrictions on usage, work out a mutually acceptable agreement. Some photographers are more restrictive with their images than others.
If you come across existing images of a property that you’d like to use, contact the owner of the images and confirm the appropriate usage fees. Neglecting to do so can land you in legal trouble, so be careful when using work not commissioned by you or your company.
The Bottom Line
With all this compelling evidence in favor of having professional photos taken for your property, it seems like a simple answer that can take your property to the next level. While investing in photography – or even just better photography – may be a process, AQUILA urges real estate professionals to consider taking our advice and making the investment.
At AQUILA, we have worked with hundreds of clients to make sure they understand exactly what is included in their quoted rental rates. We understand how important it is for your company to know where your money is going each month.
A significant portion of gross rent comes from operating expenses. This article is intended to help you better understand the operating expense component of rent and will specifically touch on these questions:
What are operating expenses?
What is (and isn’t) included in operating expenses?
What aspects of your operating expenses can be negotiated?
What are operating expenses?
Operating expenses are the costs associated with operating and maintaining a commercial property such as an office building or retail center.
Depending on the lease structure, you will either pay operating expenses as a component of gross rent or in addition to base rent. In the Austin market, triple net (NNN) leases are typical for Class A and B office space, and operating expenses are paid on top of the quoted NNN rental rate.
In a multi-tenant building, each tenant typically pays their pro-rata share of operating expenses based on the size of their space relative to the building, whereas in a single-tenant building, the tenant is typically responsible for 100% of total operating expenses.
What is included in operating expenses?
Operating expenses are made up of three main components:
Insurance: Insurance is the cost for the owner to ensure the building, which is typically required by the lender that is financing the property.
Common Area Maintenance fees: These expenses typically include management fees, building maintenance and repairs, utilities, administrative fees, management salaries and fees, property lighting, parking lot maintenance and more. Exactly what is included varies by property type and by landlord. Get more information on what is included in CAM fees in our article What Are Common Area Maintenance Fees?
What isn’t included in operating expenses?
Operating expenses should not include debt service, CAPEX, property marketing costs, capital reserves for future large repair projects, leasing commissions or tenant improvements allowances.
Is op/ex negotiable?
Typically, the the property tax and insurance components of operating expenses are not negotiable. These items are considered uncontrollable, and, therefore, they are passed directly through to the tenant.
Controllable expenses, such as CAM expenses, are negotiable to some degree as landlords and property managers can control how efficiently a building is being managed. Negotiating a cap on annual operating expense escalations is the most common form of tenant protection.
How do operating expense caps work?
There are three ways to cap operating expenses:
In a Year-to-Year Cap (also known as a Non-Cumulative Cap), there is a cap on the percent that the landlord can increase the CAM year-over-year.
With a 3% Year-to-Year Cap, if the CAM increased by 2% the first year, the tenant is responsible for paying that 2% increase.
If the next year, CAM increases by 4% the tenant is responsible for paying only a 3% increase, as they are protected by the Year-to-Year Cap.
For this reason, tenants prefer year-to-year caps, as it keeps CAM increases to a predictable level.
Cumulative Compounding Cap
In a Cumulative Compounding Cap, there is again a cap set on the percent that the landlord can increase the CAM each year. However, in this situation, the landlord can always recoup any unused increases from previous years. This is the most common form of operating expense cap.
With a 3% cumulative compounding cap, if CAM increased by 2% in the first year, the tenant is responsible for paying this 2% increase.
If the next year, CAM increases by 4% the tenant is responsible for paying this 4% increase because the landlord can collect the 3% cap for this year and the leftover 1% from last year.
For this reason, landlords prefer cumulative compounding caps, as it allows maximum flexibility.
Hopefully, now you have a better understanding of what makes up your operating expenses, and how you can best manage increasing expenses over time.