Valuable Ideas for Landlords and Tenants for filling Vacant Spaces
Earlier this week the MacRo Report Blog posted an article about co-working, a topic that was inspired by a posted by fellow commercial real estate blogger Duke Long. We interviewed Amy Benton of Want 2 Grow? to find out how their co-working arrangement with Think Baseline and Mary Kate McKenna Photography has benefited all three businesses.
The short version: the co-tenants at 147 West Patrick Street in downtown Frederick, Maryland have had such great business synergy together that they have all grown, with one of them ending up expanding into the building next door– which happened to be owned by the same landlord. Sounds like it has been a great success for everyone involved!
In today’s post we sought advice for prospective co-working tenants and landlords alike from a seasoned local landlord who has many years of experience in working with co-tenancy situations.
Occasionally, those we interview desire to remain anonymous, as is the case of the expert we interviewed. Following the steps of our mysterious expert, here’s a plan to developing a successful co-working arrangement.
Find the right space.
Check out older buildings in downtown Frederick. They often have space configurations that are awkward, or odd, or have shared bathrooms. These types of office spaces often lend themselves well to co-working arrangements. And, landlords have a harder time leasing these spaces and will be more willing to take an alternative lease arrangement.
Another consideration is existing space in conventional office buildings that is either vacant or available for sublease. With the amount of vacancies in the market, opportunities abound.
Find a business that compliments yours when seeking co-tenants.
First of all, your prospective commercial landlord isn’t going to find you co-tenants, just like a residential landlord wouldn’t be responsible for finding you a roommate.
In terms of office space co-tenancy arrangements, I find that creative people tend to work very well together. As do groups who are similar in age, and most importantly, similar in work style. I love to work with businesses in their infancy—they are energetic, creative, and flexible in terms of problem solving.
Decide who will take legal responsibility for the lease.
A co-working arrangement is not going to be acceptable to a landlord unless there is one person, or one business, willing to take the lead, to put their signature on it and be the point of contact. Otherwise there are too many parties and too much work for this to be worth the effort to a landlord.
Present a clear plan to your landlord.
Landlords get stuck doing the same thing over and over, and a business person interested in doing something out of the ordinary in terms of leasing space will need to find a way to make a fresh presentation with a clear vision.
When presenting this idea to a landlord, bring to the table a set of complementary businesses and specific people. You need to be able to say to your landlord “here is my business plan for these rooms.”
Landlords: market your space as having co-tenancy potential!
If you own or are listing a vacant office space with challenges like shared bathrooms, or an odd or awkward configuration … or with multiple rooms that have been difficult to fill, it may be worthwhile to market this as potential co-working or co-tenant space.
Be open to non-traditional leasing arrangements.
Let the market know you’re willing to get creative. And open your mind to things other than just the standard triple net lease. The right tenants may just show up for you!
Our anonymous real estate expert who hides in the shadows does give great advice! In this economy, it’s definitely going to take an out-of-the-box mindset to fill the abundance of office space that sits vacant under the current market conditions.
Have you heard of any other creative niches in the commercial office space market?
Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He is an appointed member of the Frederick County Charter Board. He also writes forTheTentacle.com.