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FOCUS ON WHAT’S IMPORTANT

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FOCUS ON WHAT’S IMPORTANT
Companies searching for new office or industrial space in today’s soft office market, or conversely today’s healthy industrial market and listing brokers and landlords are guilty of this as well… They often tend to focus almost exclusively on rental rate.  In other words, the lowest price should be enough to positively influence a tenant’s decision to lease space in a building.  The result? We’re “commoditizing” commercial space alternatives while losing the focus on what is right and best for the tenant.
SPACE ISSUES BEYOND PRICE
Let me be the first to say that economics are always important and competing buildings must be reasonably similar.  However, economics are not the most important element when it comes to making a real estate decision.  I have often told clients, “What difference does it make if the landlord provides the space at no cost, if the space is not functional and does not effectively work for you?”  Retail clients generally seem to have a better handle on weighing the intangibles when they make space decisions.  They understand that there are issues far more important than price.  Issues such as exposure, vehicle traffic counts, ease of access, parking and neighboring tenants.  Issues that will impact their long‐term success more than a marginal reduction in their base rental rate.
TOTAL COST SOLUTION
So many components go into a good real estate decision, and price is only one of those components.  Tenants need to look at a “total cost solution” rather than just a “rental rate” solution.  The latter is the proverbial tail wagging the dog kind of decision, and decisions like that never work well over the long term.  That’s why establishing a preliminary budget is critical to the process.  So that companies don’t waste time looking at what they can’t afford.  Companies often do themselves a disservice by discounting the importance that a well thought out facilities plan plays in their long‐term success.  Space, like any other component of a firm’s business plan, should function strategically.  Ultimately, ensuring long‐term success for the firm.  The list of items that ensure long‐term success generally relegates price to the lower tier of importance.
RANKING CRITICAL ISSUES
Companies must address, evaluate and rank the importance of critical issues.  These may include parking availability, access, visibility, building efficiency, flexibility to expand and contract, on‐site or close‐by amenities, public transportation availability, security, sustainability issues, building management, landlord financial viability ‐‐‐ and, obviously, the financial structure.  Whether internally generated or broker generated, tenants must understand the total cost of the deal.  One deal may provide more dollars for tenant improvements; another deal may offer less tenant improvement dollars but more free rent.  Yet another may offer to graduate or step the rent and pay moving costs.  And in the end, a simple consideration like ease of client access or proximity to public transportation may trump the lower base rent deal.
Guard against making an impulsive, “head in the sand” facility evaluation.  Select a member of your team and a competent real estate broker who will ensure that your firm makes a well thought out space decision, not a decision based on a single issue like rental rate.  Make sure you have completed the proper due diligence before signing on the bottom line!
NEED HELP FINDING THE RIGHT SPACE?
Reach out to one of our
TRUSTED. DEDICATED. EXPERIENCED.
brokers at Paramount Real Estate Corporation: 
Industrial: Fred Hedberg, CCIM, SIOR, Principal
Phil Simonet, Principal
John Young, CCIM, Vice President
Joseph Schultz, Associate
Jack Buttenhoff, Associate
Office: Nancy Powell, Vice President

LEASE VS. OWN

Lease vs. Own

LEASE VS. OWN
Many business owners dream of owning their own industrial or office building rather than lease space and pay rent to a third party landlord.
One should consider both the costs and benefits of commercial property ownership to understand if it’s the right financial and operational move for the individual owner (what ever form of ownership it may be) and the company occupying all or part of the property.
Potential Benefits of Ownership:

Better control of building operating expenses
Potential property value appreciation creating more personal wealth
Principal reduction on the loan via rent payments from the tenant
Tax benefits such as depreciation
An excellent marketing tool (the bldg.) demonstrating the success of an organization
May be less expensive than leasing space in today’s market

Potential Costs and Risks of Ownership:

Generally less flexibility to expand or contract space size
Requires equity up front: 10%-25% down payment
Responsible for ALL building maintenance (roofs, parking lot, HVAC, etc.)
Could lose value during a market downturn
A default on the loan may result in foreclosure by the lender

If you are interested in a more thorough review and recommendation on Own vs Lease feel free to call Paramount Real Estate Corporation.  We have decades of experience leasing, acquiring and disposing of commercial real estate properties.
Written By: Phil Simonet, Principal | Paramount Real Estate Corp | TCN Worldwide

REAL ESTATE TIP: CHOOSING THE RIGHT BROKER

REAL ESTATE TIP: CHOOSING THE RIGHT COMMERCIAL REAL ESTATE BROKER
Would you buy a car from a boat deal?  Let your barber clean your teeth?  Perform your own surgery?  Of course you wouldn’t.  You want the people who you work with to be professionals and experts in what they do.  So why would you go into the commercial real estate market without professional help?
Commercial real estate brokers are trained and licensed professionals.  They all have geographic expertise, specific real estate product knowledge, and different negotiating styles.  When you are ready to go out and find property to lease, buy, sell, or invest in, your best bet is to interview a number of brokers to find the best fit for you.
Here are some questions you should ask real estate professionals to clearly understand if they can add value to your situation:

What product type do you specialize in?
What is the geographic area you focus in?
How long have you worked on this type of transaction?
Can you tell me about another client with similar needs that you helped in the past?
Do you work alone or with a team?
What is your communication style?

Do your homework and make sure you have a broker who knows the type of space you are looking for inside and out.
“Isn’t it cheaper to lease or buy space on my own?”
People always ask me “Isn’t it cheaper to lease or buy space on my own?”  No, is the answer most of the time.  Any broker you interview should be open and transparent with how they will collect their fee.  The industry has a standard commission for each product type, so make sure the brokers you are interviewing all tell you the same thing.  Typically, the broker commission is paid by the landlord or seller when leasing or buying an owner/user building.  In addition, your trained professional will help you avoid pitfalls.  These could include; paying over market rents, getting locked into a larger term than you want, and even having to pay to build-out new space yourself.
Do yourself a favor and let a professional help you with your space needs.  It will save you time, worry, and in the end, MONEY.

FOR LEASE – LONE OAK BUSINESS CENTER II


FOR LEASE
LONE OAK BUSINESS CENTER II
1060 Lone Oak Road | Eagan, MN

Property Highlights:

Two (2) office/ warehouse spaces located in Eagan are available For Lease immediately

Option #1: 3,410 SF office + 9,133 SF warehouse = 12,543 SF total
Option #2: 7,605 SF office + 10,256 SF warehouse = 17,861 SF total

Located just off Lone Oak Road and Neil Armstrong Road, with easy access to I-35E, I-494 and Hwy 55
Close proximity to downtown Saint Paul and MSP International Airport
Docks & drive-in doors available

Option #1: four (4) docks; one (1) drive-in door
Option #2: two (2) docks; one (1) drive-in door

16’ clear height

CONTACT:

Phil Simonet | (952) 854-8381 | psimonet@paramountre.com
John Young, CCIM | (952) 854-5067 | jyoung@paramountre.com

FOR LEASE — River Bend Business Park IV


FOR LEASE
River Bend Business Park IV
315 Randolph Ave | Saint Paul, MN

Property Highlights:

47,000 SF build-to-suit office/flex/showroom or warehouse opportunity For Lease
Approximately 10 acre site located just off Shepard Road, with easy access to I-35E, I-94 and Hwy 52
Close proximity to downtown Saint Paul and MSP International Airport
Overlooking the Mississippi River with direct access to the Samuel H. Morgan Regional Trail
24’ clear height in warehouse; docks and drive-ins build-to-suit
Strong local ownership and management

CONTACT:

Phil Simonet | (952) 854-8381 | psimonet@paramountre.com
John Young, CCIM | (952) 854-5067 | jyoung@paramountre.com
Connor Ott | (952) 854-8309 | cott@paramountre.com
TRUSTED. DEDICATED. EXPERIENCED.
We’re the people you want on your side.