Has anyone experienced this in finding a place to lease?
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Angela Samuels
Jul 30, 2014, 4:44:37 PM7/30/14
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Last Friday, I was supposed to sign a lease for my future coworking space. I have been working with this owner for 6 months to get the lease right. I even hired a lawyer to take a look at it and make sure it wasn't favoring the landlord. I come to the lease signing and I still had a question about the last item that we changed which was the (personal) guaranty. The real estate said oh we changed it back to the original terms (initial term guaranty). I ask him did he email us, he said no. With the suggestion of my real estate agent, I took the weekend to think about it and talk to my lawyer. My lawyer said before hand that he wouldn't accept the terms that is why he recommended we change it.
Now I have to try to find another place, but it was really disturbing and discouraging someone would do that. What if we didn't ask the questions, would he allowed me to signed it and not know the changes were there? He came back wanting to bargain but I don't trust him and wouldn't dare want to work with him. It's crazy but maybe it was meant to be, maybe there is a better place and this is why it happened. Anyway, would love to hear your stories.
Thanks,
Angela
Now I have to try to find another place, but it was really disturbing and discouraging someone would do that. What if we didn't ask the questions, would he allowed me to signed it and not know the changes were there? He came back wanting to bargain but I don't trust him and wouldn't dare want to work with him. It's crazy but maybe it was meant to be, maybe there is a better place and this is why it happened. Anyway, would love to hear your stories.
Thanks,
Angela
Alex Hillman
Jul 30, 2014, 5:03:12 PM7/30/14
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A lot of landlords are, well, crazy. The fact that you've been going back and forth for 6 months is is a pretty big red flag to me that this relationship wasn't going to work long term. You don't even want to think about the gnarliness that would create down the road for you and your community.
Consider this a blessing in disguise. Having a landlord who understands you, and who you trust, is WAY more important than getting the lease right.
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Susan Dorsch
Jul 30, 2014, 5:12:22 PM7/30/14
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I'd echo Alex on this one for sure. When we were first getting started with Office Nomads, we had been in negotiations with a landlord who seemed eager to work with us at first, but the more we learned the more we realized they wanted to control everything about how we were using the space (asking us to ensure there was no one on site after 8pm was my favorite one...um, no). Walking away turned out to be the best decision we could have made!
Sounds like you did your homework, caught the changes, and walked away when you should have. Nicely done! Knowing when to say no is one of the most important elements of any project.
Best of luck finding a landlord who is willing to work with you - I promise they're out there!
Susan
Jerome Chang
Jul 30, 2014, 5:19:05 PM7/30/14
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Lease negotiation for me is the worst part of setting up a Coworking space. Hang in there. My first lease was the only one in under 6 months although renewing it later took 18 months. I use a broker, a lawyer, a therapist... :-P
Jerome
Alex Hillman
Jul 30, 2014, 5:24:25 PM7/30/14
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What value do you guys get from working with rental brokers? That's never made sense to me.
-Alex
Jerome Chang
Jul 30, 2014, 6:04:50 PM7/30/14
to cowo...@googlegroups.com, Kevin@rsfla.com Simpson, Michael Preiss
Tons.
Brokers tend to know more about motivations of landlords, standard deal terms, or what creative term you could negotiate.
Brokers also look out for details in the lease that are not favorable, vs a lawyer who tends to focus on the legal side and not business side.
Brokers research availabilities then short list them for you unless you like to do that all yourselves.
Brokers also tend to already have relationships with the other broker, landlord, or other parties involved so you can understand more the issues at hand. This includes seeking opportunities that aren't even listed yet.
I've copied my two brokers for them to chime in or for anyone to ask them questions. I've worked with them for 5 years and they intimately know what Coworking space operators need.
Jerome
Anca Mosoiu
Jul 30, 2014, 6:09:00 PM7/30/14
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When I got my second space, I worked with a professional broker who knew a lot about the local buildings and landlords. He steered me away from a couple of folks and buildings that would have made my life unpleasant.
While my guy wasn't super-psyched to show me space in buildings where the landlord wasn't going to pay his commission (e.g. the buildings owned by individuals rather than larger firms), he was very helpful in keeping me appraised of things coming up in the market, made sure that the landlord threw in some free improvements, and generally saved me a lot of time.
Anca.
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Anca Mosoiu | Tech Liminal
http://techliminal.com | T: @techliminal | F: facebook.com/techliminal
Angela Samuels
Jul 30, 2014, 7:02:58 PM7/30/14
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That might be a problem that I have, I'm working with a long time friend real estate agent who I worked with years ago. She mostly works with homes so I don't think she knows the commerical market as much. I've been doing searching because a lot of people don't know what coworking is yet. We're going to look at a couple more properties next week. Thanks for your responses. It makes me feel a little better that I'm not the only one that goes through with this.
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Jerome Chang
Jul 30, 2014, 8:15:54 PM7/30/14
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Oh wow. Residential agents really have no business brokering commercial spaces...MAYBE if you're buying a building or house, but still, NOT a good idea.
JEROME CHANG
Mid-Wilshire
5405 Wilshire Blvd (2 blocks west of La Brea) | Los Angeles CA 90036
ph: (323) 330-9505
Downtown
529 S. Broadway, Suite 4000 (@Pershing Square) | Los Angeles CA 90013
ph: (213) 550-2235
Jorge Vargas
Jul 30, 2014, 9:59:36 PM7/30/14
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Sighly off topic but haven't you all tried to get the landlord to invest in the coworking space. I know our case was weird as he happens to be very interested in entrepreneurship and owns a lot of office space.
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Jerome Chang
Jul 30, 2014, 11:07:35 PM7/30/14
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I've tried. The best so far has been like a retail store in a mall: rev share.
I, however, have larger build-out budgets than most so that probably has been the challenge. For those with lower bars, a landlord's investment could be more feasible...maybe via lease incentives you wouldn't be able to get otherwise.
Jerome
Ramon Suarez
Jul 31, 2014, 3:21:35 AM7/31/14
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I do revenue share.
Pros
* Rent is a variable cost
* No guarantee
* Small or no investment
Cons
* You have less control over your space and conditions (cleaning, furniture, Internet...)
* Limited / precarious lease agreement duration
* Interference by the landlord
* You may not own your clients
* You have no control on getting things fixed
Sounds rosy, but it can be a nightmare for you and your business.
Never let the owner do the billing.
Bryan Boyer
Jul 31, 2014, 10:58:27 AM7/31/14
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The money we spent on a commercial RE lawyer to help with Makeshift Society Brooklyn paid itself back in multiples.
They knew which proposed terms we could/should push back on, they had creative ways to get a better abatement or TI, and it was also just reassuring to have someone with specifc experience on our side.
That last point is important: do not underestimate the emotional drain of the real estate / lease / renovation process. Find a RE lawyer who knows the business, and you can trust, and don't look back.
Oh, our lawyer also sent us pie on opening day, so it's possible my positive feelings are the result of bribery.
-bryan
Angela Samuels
Jul 31, 2014, 12:58:36 PM7/31/14
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Thanks for the input, a friend just recommended me a commercial real estate agent. I hate firing people, but business is business.
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Melissa Geissinger
Jul 31, 2014, 2:48:09 PM7/31/14
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We ended up getting the first place we looked at, and we only looked at two places. The previous tenant was in the middle of a 3 year lease and used a broker to help her find a replacement tenant. In our particular case the broker ended up being a heck of a nice guy with a lot more "personal" relationship to the space than the distant owner who lives out of town and only answers emails with one sentence.
The broker and even the previous tenant are huge supporters of our coworking space (opening September 1st) and even plan on attending our launch party. They have both even expressed interest in taking classes and workshops we plan to offer on web design! Pretty cool, right?
We obviously got huge positive vibes from everyone we dealt with in our situation, which unfortunately seems like it's the complete opposite from what you had, Angela. Just go with your gut. Just like falling in love, when it's right you'll know!
Melissa Geissinger
WIMP
www.wimpspace.com
The broker and even the previous tenant are huge supporters of our coworking space (opening September 1st) and even plan on attending our launch party. They have both even expressed interest in taking classes and workshops we plan to offer on web design! Pretty cool, right?
We obviously got huge positive vibes from everyone we dealt with in our situation, which unfortunately seems like it's the complete opposite from what you had, Angela. Just go with your gut. Just like falling in love, when it's right you'll know!
Melissa Geissinger
WIMP
www.wimpspace.com
Jerome Chang
Aug 1, 2014, 6:25:24 PM8/1/14
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FYI, from my broker:
On Jul 31, 2014, at 12:47 PM, Mic...@rsfla.com wrote:
Jerome, thanks for looping us in. Every transaction is different of course, but we believe there is real value in engaging a broker who understands both the target market AND your business needs.
Landlords are in the business of leasing commercial real estate full time and are usually far better equipped to negotiate a lease.
Without an advocate on your side who understands the process and target market you can be certain that the landlord generated lease will almost always be in their favor. There is a reason most major corporations engage a commercial broker to assist with their real estate needs.
The challenge of course is finding a commercial broker up to the task. You need to put the same time and energy into selecting a broker as you do choosing legal counsel or your CPA.
We represent tenants small and large. I've been at it 25 years, the last three from my own firm, operating from Silicon Beach / Downtown LA coworking facilities. Feel free to count me as a resource if you have questions about the process.
Regards,
Michael
Michael Preiss
rsfLA
1450 2nd Street, #150
Santa Monica, CA 90401
(310) 526-0910, office
(310) 686-8909, mobile
www.rsfLA.com
JEROME CHANG
Mid-Wilshire
5405 Wilshire Blvd (2 blocks west of La Brea) | Los Angeles CA 90036
ph: (323) 330-9505
Downtown
529 S. Broadway, Suite 4000 (@Pershing Square) | Los Angeles CA 90013
ph: (213) 550-2235
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