Four Signs That Your Company Could Benefit From A Change Of Space

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Let’s face it. Nobody likes moving. The thought of having to pack up and relocate everything to new space can be daunting. But for some businesses, an ill-fit space could be holding them back from realizing their firms full potential.

Here are four signs we’ve found may signal that it’s time for a change of space for your company:

1) Your Current Location No Longer Represents Your Company’s Brand

Whether you’re are small creative start-up or a large, innovative corporate tech firm, if you’re working out of an office space that looks like it could be a time capsule from the 1960s, it may be time for a change.

Studies have shown that when your work environment contrasts too greatly with your brand and company culture, it can have a negative impact on your employees and can also make it increasingly difficult to attract the new talent.

Most employees want to work in an energizing, fun and inspiring environment that compliments the brand they’re working to help create. So if your office space is crowded, disorganized, and in desperate need of repairs, you may be missing the opportunity to subconsciously remind your employees of your brand’s core values that you want them to represent in everything they do.

Since the appearance of your office says so much about your company, it’s important to keep in mind that employees and clients will start to make assumptions about your firm the moment they walk up to the building it’s housed in. The question you need to ask yourself is, what assumptions will people make about your company? What story is your space telling about your brand? And more importantly, is that the story you want to be telling people?

2) You’re Struggling To Make The Space Work Efficiently

Is your office space starting to feel a bit like a maze, with departments haphazardly laid out here and there where you can fit them? Do you find yourself spending half your day navigating from one end of the office to the other in order to communicate with all the employees you need to?

Even if you physically have enough space in your office, it simply may not be laid out to best fit your needs as a firm. Or perhaps the layout is simply too inflexible to keep up with your changing needs as your company grows and expands.

Most companies act like a living breathing organism, they grow, they shrink, they change shape and sizes constantly. Having an office space that allows for those changes without splitting departments or moving people to inconvenient areas of the office can be a key factor in how efficiently you are able to operate.

A good rule of thumb is that you should be operating within a space that offers a range of different types of workspaces: open areas, space for small teams, space for large teams and space for individual workers in addition to dedicated space for private or confidential conversations.

3) Your Space Can No Longer Accommodate Your Technology Needs

In today’s world technology is constantly changing. In the 1960s we needed an entire room just to house one computer, now we can house that same computing power in the palm of our hand. It only follows then that as the technology our businesses utilize changes, the space it interacts with and lives in must change as well. However many businesses find themselves working in offices that simply cannot keep up with those changes.

And while technologies tend to be getting increasingly smaller, more and more sophisticated copiers, printers, computer monitors and a multitude of other machines invented to help increase our workplace efficiency are taking up more room than ever and beginning to encroach on human workspace in many cases. Each computer, printer, copier and fax machine needs so much open space around it to prevent malfunctions due to overheating and to allow access to its controls.

In addition, your office may also need to keep up with increasing demands for data connectivity. Dead spots that affect your employee’s ability to connect to wireless service, or the inability to utilize a high bandwidth connection, may decrease your employee’s productivity potential.

4) Your Location Just Isn’t Working Out

The visual appearance of your office is one thing, but the old adage still holds true, location, location, location can be everything. The convenience of your office to your target employees and clients has the potential to make a huge difference in how your business can compete in your industry.

Commute time alone is often a large deciding factor for many employees. Long or heavily trafficked commutes are highly taxing on employees, and that stress may affect their work when they finally make it to the office.

In addition, proximity to amenities like restaurants, espresso shops, health clubs, dry cleaners and banks are not only helpful in ensuring the happiness of your employees, but also give you more options for entertaining important clients with ease.

Finally you’ll want to consider how well your industry is performing in an area. Are there too many firms all competing for the same dollars? If so, you may struggle to grow while you fight over the best employees and clients.

So while even just the mere thought of moving is daunting to just about every business owner, it’s important to keep in mind the impact that housing your company in an ill-fit space can have.

If you think your office could benefit from a change, don’t hesitate to call us at 256-536-8809 to see how we can assist you in finding the perfect space to help maximize your company’s full potential!

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Make sure you’re staying on top of the latest trends, newest developments and hottest new stores in Huntsville by subscribing to our weekly blog updates!

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KADIE PANGBURN
MARKETING COORDINATOR
CRUNKLETON Commercial Real EState Group
KADIE@CRUNKLETONASSOCIATES.COM
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Trend Report: The Future of Retail in 2017 – A Changing Environment

As a commercial real estate broker I am constantly asked: what is driving the future of retail and retail shopping centers? What changes, if any, can we expect to see in the coming years?  And how are property owners dealing with the effects of e-commerce on brick and mortar retail?

So today we are going to take a few moments to try and answer a few of those questions, take a look at the changing landscape of retail shopping and the effect it is having on commercial real estate right here in Huntsville, Alabama.

Let’s start by looking at e-commerce, its effect on physical retail, and the opportunities it is providing to those that are willing to adapt to a changing marketplace:

It is no secret that online shopping is influencing the traditional brick and mortar retailers. Black Friday and Cyber Monday 2016 were the largest online shopping days in history and that trend will likely continue. However, does this mean that we are seeing the beginning of the end for brick and mortar retail? Absolutely not. What we are seeing instead is a shift in the traditional shopping center layout and tenant mix. The typical retail store is getting smaller and retailers are focusing more and more on the experience of shopping.

Labeled “Experiential Retail”, retailers are shifting their focus to providing shoppers with a fun and exciting experience. Shoppers not only want to touch and feel the product they are buying, but want to be entertained in the process. This is something that e-commerce can never provide. And not only are the younger generations demanding that experience, they are also willing to pay more to get it.

So how does Experiential Retail and the changing layout of brick and mortar retail affect the commercial real estate market?

Well, this desire for a better experience doesn’t just start once a shopper walks through the door. Consumers want the entire experience to be better, which includes the physical layout of the shopping center and the overall destination. Urbanization and the revitalization of downtowns across the country are a perfect example of this. Even right here in Huntsville we are seeing consumers demand a different experience. The success of projects like Campus 805, Lowe Mill, and The Garage at Clinton Row are great examples of the adaptive reuse of properties to provide a better experience.

What does all this mean for existing shopping centers and landlords?

The term adaptive reuse that I mentioned previously is going to be critical for Landlords of traditional shopping centers. As retailers continue to shrink their footprints, Landlords are going to have to get creative in how to back fill the big box spaces left by shrinking retailers. We are already seeing examples of this across the country and even right here in Huntsville. Large box spaces left vacant are being backfilled by entertainment type uses such as indoor go-cart tracks and trampoline arenas. Medical and dental concepts are even starting to open up locations within retail environments, backfilling former retail stores. There are opportunities out there for Landlords that are willing to think outside the box and be creative.

Despite the ever-growing presence of e-commerce, we are far from the end of brick and mortar retail. Consumers are willing to pay for a better experience and the ability to touch and feel what they are buying. This is evidenced in the fact that online giant Amazon is getting into the brick and mortar game with physical retail stores and even a grocery store. There will always be a place for the traditional retail store, it just might look different and be located in different areas than what we have grown accustom. Retailers and Landlords that are willing to change their mindset and adapt to the new environment will have a competitive advantage going forward.

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Originally from Tennessee, Zac studied business management at Samford University. After moving to Huntsville in 2001, Zac started out his career in banking, wealth management and financial planning. In 2010 he joined Crunkleton and has since become the VP of Leasing for the commercial real estate group where he focuses on retail leasing and development.

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Zac Buckley
VP of leasing
CRUNKLETON Commercial real estate group
ZAC@CRUNKLETONASSOCIATES.COM

10 Must-Know Commercial Real Estate Terms

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We know leasing your first commercial space can be an intimidating process, especially when you don’t feel like you fully understand the terminology that is being used. That’s why we’ve put together this handy guide of our Top 10 Must-Know Commercial Real Estate Terms to help you navigate your negotiations like a seasoned pro:

1) Letter Of Intent (LOI)

A Letter of Intent (often referred to as a LOI) is typically the first step taken when two parties choose to start the process of negotiating a deal.   Because commercial real estate documents like leases and purchase agreements are frequently complex, most brokers will choose to submit an initial LOI to the seller or landlord on behalf of their clients to help both parties quickly get up to speed with what each side is looking for in the deal.  A short document, the LOI will clearly spell out the most important deal points so each party can easily decide if they are interested in further negotiations.  Eventually, the LOI may also get used to draft the official legal documents if the deal moves forward.

2) Rentable vs. Usable Square Feet

When you rent a commercial space, the area inside its walls is called the “Usable Square Footage.”  So, for example, if you had an office in a high-rise building, the “usable square footage” would encompass the total square footage of your personal office space on the 12th floor.  However, usually you’ll also have to pay for your share of the building’s common areas, such as the lobby, hallways, elevators and bathrooms (things that even though they aren’t in your office space, you still use on a daily basis).  The combination of the two is called your “Rentable Square Footage.”  So even though your office space may only be 5,000 SF (Usable SF), you may end up paying rent on 5,600 SF(Rentable SF) of space.

3) Load Factors

Load Factors are simply a quantitative way to express just how much of a building’s common area space, you as a tenant, are personally responsible for paying for.  Say, for example, you rent that 5,000 SF of usable space we mentioned above, and then you also have to pay for 600 SF of the building’s common area space.  In this scenario, your space would have a 12 percent load factor since 5,600 divided by 5,000 is 1.12 or 12 percent more.  These percentages let tenants easily compare the load factor for different buildings in which they may be interested, since a higher load factor will mean that more of a tenant’s monthly rent will be dedicated to common area space and less to the suite they occupy.  However, that being said, buildings with higher load factors will also often have more amenities, such as spacious lobbies, atriums or shared conference rooms which can be extremely valuable assets to your business.

4) Rent Escalations

Most commercial leases you encounter will have language in them that  states that the rate you agreed to paid initially will go up periodically over time.  This is typically done to ensure that the base rent will keep up with inflation.  These increases are referred to as “Rent Escalations” and are very common in commercial real estate.

5) Tenant Improvements (TI)

Most of the time when you lease new space, you’ll need to have it customized to fit your needs.  These customizations are referred to as “Tenant Improvements” (or “TI” for short).  Often times, landlords will offer to pay some or all of these costs for you, depending on the condition of the space they are leasing out and how much work they know it will need to be ready for occupancy.

6) Common Area Maintenance (CAM)

As discussed above, most buildings have some amount of common area space, things like lobbies and elevators, or even external landscaping for the building.  Well, those things need to be kept clean and maintained.  Imagine having your clients walk up to a building overgrown in weeds and into a lobby with overflowing trashcans and a dirty floor.  So, in order to maintain these areas, some leases have what they refer to as Common Area Maintenance (or CAM for short) charges.  This is simply the share of your building’s operating/maintenance expenses that you’ll pay each month.  It’s worthwhile to keep in mind that this isn’t typically a profit center for your landlord, they are simply trying to  recover the costs of upkeep on the building.

7) Options To Renew

One of the most favorable terms that you can have your commercial real estate broker negotiate for you on your behalf is an “Option To Renew”.  Simply put, options to renew grant the tenant an option, or several consecutive options to renew their lease after their initial term is up, typically including set rental rates for those renewals.

8) Full Service, Modified Gross & Triple Net Leases

We’ve outlined these different lease types before in great detail HERE on our blog.  But here’s a quick explanation of each:

Full Service: The asking rental rate for the property includes all operating expenses for the property, which can include janitorial services, CAM, utilities, property taxes and property insurance.

Triple Net Lease (Typically listed as “NNN”): The rental rate includes the base rent only, then the tenant will also be responsible for paying a portion of all three nets on the property (Net Taxes,  Net Insurance, Net Common Area Maintenance).  In addition, the tenant will also be responsible for covering their utilities and janitorial services.

Modified Gross: The rental rate will include the base rent and will also typically include any or all of the “nets.”  Utilities and janitorial services are typically excluded from the rent and must be covered by the tenant.

9)  Rent Commencement Date vs. Lease Commencement Date

The “Lease Commencement Date” is the date in which the lease goes into effect and legally binds both parties to the terms of the lease.   The “Rent Commencement Date” however, is the date on which the Lessee will begin to pay rent to the Lessor.  In many cases these dates are the same, however these dates can also often be different.  For instance, this can occur when work needs to be done to a space prior to a new tenant moving in.  As an incentive, Landlords may offer a rent-free period of several months as the tenant builds out their space and prepares it for occupancy.  Rent Commencement Dates may also either be fixed or floating dates tied to an action or event instead of a date on a calendar.  For example, you may negotiate for your Rent Commencement Date to be upon receiving your certificate of occupancy.  This ensures that even if there are delays in the build out process, you won’t begin paying rent until the agreed upon event occurs.

10) Condition Of Premises & Delivery Specifications

Cold Dark Shell, Warm Grey Shell, Warm Vanilla Shell, these may sound like delicious flavors of ice cream, but actually they are descriptions for how your landlord is agreeing to deliver your newly rented space to you.  Often a confusing mess of words and terms that vary drastically from brokerage to brokerage, we wrote a whole blog sorting through and explaining what all of these terms mean HERE.  But here’s the quick version:

In your lease, your landlord is going to outline the “Condition Of The Premises” or the “Delivery Specifications” to you, basically what condition your space will be in when you move into it.  Will it have power? Floors? Drywall? HVAC units? HVAC distribution? Lighting? Restrooms? Or will the space be what is called “Turn Key Space,” fully built out and ready to move in and plug and play?  These are all important specifications that will be outlined under the condition of the premises and delivery specifications in your lease.

And of course, if you ever need help navigating your way through any of this, we are always here to help! In fact here is a list we created of the Top Five Ways Our Brokers Can Help You!

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Make sure you’re staying on top of the latest trends, newest developments and hottest new stores in Huntsville by subscribing to our weekly blog updates!

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KADIE PANGBURN
MARKETING COORDINATOR
CRUNKLETON Commercial Real EState Group
KADIE@CRUNKLETONASSOCIATES.COM

Trend Report: Brick-and-Mortar Retail Is Not Dead

Over the past couple decades e-commerce has been taking over retail…. or has it?

One of the largest online retailers in the world, Amazon, shocked the world when they opened a bookstore in Seattle’s University Village last November. This single act has brought national attention to a sway back toward brick-and-mortar stores, as well as an “omni-channel” approach to retail (the seamless integration of online stores to physical stores).

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Many other companies like Warby Parker and ThinkGeek have also decided to make the move to adding concrete locations, allowing customers to closely interact with the brand and their products.

But what is causing this trend?

I did a little research and have compiled this list of the top 5 reasons that brick-and-mortar retail is not only alive and well, but superior to e-commerce:

People Prefer to Shop in Person

The simple fact is that the majority of customers still prefer to shop in-store. They want the “experience” of shopping and the ability to touch or try on products.

Customers Spend More Time In-Store

Research shows that customers spend almost one and a half times longer in a physical location browsing products than they do when perusing an online website.

Increased Sales

Browsing in a brick-and-mortar location results in one in five customers actually making a purchase. Whereas according to “Instore vs. Online” by icsc.org, online shopping is closer to 1 in 20 customers making a purchase after browsing a website’s products! Not only does shopping in an actual store result in more completed purchases, on average people also tended to spend a lot more in person than they do online.

More Cost Effective for Brand Awareness

It’s true that e-commerce has grown exponentially, but with it, its competition has grown exponentially as well. That’s because every company is trying to reach customers through the same Google search results. This has caused online advertising and keyword purchase prices to skyrocket. According to the Guardian, “Macy’s and Nordstrom’s spent an estimated $6.4 million and $4 million respectively, in paid search listings for the top 1,000 apparel-related keywords in the first quarter of 2015.” This has led many online-based companies to start using brick-and-mortar locations to expand their customer base and awareness. These companies have shown that physical stores can increase sales, brand awareness, and online traffic all at a fraction of the cost of Google keyword purchases.

In-Store Growth Rates Equal $144 Billion

In this handy infographic published by icsc.org,  they explain some of the confusion around e-commerce’s seemingly huge growth. E-commerce’s current growth rate of 17%  is calculated from only a tiny portion of total retail purchases, about 6%. And this 17% comes to about $38 billion in growth for e-commerce. In contrast, in-store retail only has a 3.5% growth rate, however they account for 94% of total retail purchases yielding about $144 billion in growth! This explains why people may think e-commerce is growing more quickly than in-store retail, but in fact, brick-and-mortar retail is still the king.

© ICSC In-Store Vs. Online

© ICSC In-Store Vs. Online

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Make sure you’re staying on top of the latest trends, newest developments and hottest new stores in Huntsville by subscribing to our weekly blog updates!

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LINDSEY POPPE
MARKETING ASSISTANT
CRUNKLETON & ASSOCIATES
INFO@CRUNKLETONASSOCIATES.COM