Mark Decherd, VP of CBRE primarily serves local small-cap and mid-cap companies in developing and executing real estate solutions specifically designed to profit their businesses.
Specializing in tenant representation, his services also include lease and lease renewal negotiations, site selections, asset acquisitions/dispositions, lease analysis, and multi-market transactions.
Here are some tips to help small business owners understand and successfully navigate the Charlotte office real estate market today:
1. What is the state of the Charlotte Commercial Property Market, more precisely the office market?
The office market has 50 million square feet of office space, with 35% of it in Downtown; the vacancy rate is 10%, which is the lowest it has been in 15 years. The average rental rate is $24 per square foot. The highest rental rates are $30 per square foot and above in Downtown, Midtown, SouthPark, and the Ballantyne area. There is approximately 2.5 million square feet under construction with about 1 million square feet of it in the Downtown area. The balance of it is located in Midtown, SouthPark and Ballantyne. The vacancy rates in all of the hot submarkets are in the single digits. It is becoming increasingly challenging for small business owners to find options in Downtown, Midtown, and SouthPark.Tips on How to Successfully Negotiate an Office Lease by Mark Decherd
2. What are the important factors a small business owner should consider when evaluating its real estate needs?
First, their real estate decision should always compliment their business in a way that makes their business thrive. It isn’t always the best rate. Factors that come into play include: building location, building amenities, availability of parking, access or light rail/transit, proximity to labor pools, building security, ability to control heating/cooling, quality of lighting, ergonomics, layout of office (open v. private office), proximity of airport, etc. Second, compare buying a condo/building versus leasing one. If flexibility and growth are important leasing is probably better. Owning real estate can be great when the market is going up, but it can be a real burden on the business when the market is going down.
3. How can a small business owner ensure they get the best real estate deal for their company?
Real estate is a team sport. It is very helpful to engage a commercial real estate broker that has experience in the market. Don’t be a lone ranger, particularly if you are considering a lease transaction. Market information on completed lease transactions is not public information, like it is with building sales. The quoted lease rate is negotiable as are many provisions of a commercial lease, such as a termination option, a renewal option, an expansion option, etc. Your lease should be designed to help your business, not hinder it. The fee to the tenant rep broker is typically paid by the landlord and not by the tenant. It is also beneficial to engage other professionals. It is always wise for small business owners to have their lease reviewed by a real estate attorney. There are a number of excellent, and very affordable, real estate attorneys that a tenant rep broker can recommend. A tenant rep broker can also recommend several vendors that small business owners will utilize when securing office space – such as telecom vendors, furniture vendors, cable vendors, architects, general contractors, etc.