Thursday, September 23, 2010

Entrepreneurs and Early Stage Businesses Rejoice!

 (at least regarding leasing space for your business…)

It is great working with early stage companies – the energy, optimism and vision are contagious, and it’s always encouraging to be around teams that are growing, hiring, figuring it all out.  There are a lot of variables on the plate – and at least for now one of them is really in favor of the entrepreneurs; great deals on the office space and facilities they need to ramp up.  Rates are down, flexibility on terms is good and even bootstrap companies can get space on reasonable terms.

The high vacancies in all commercial properties has pushed rates down – a lot.  I recently represented a digital arts company in downtown Seattle.  Their prior landlord misjudged their wiliness to move if he didn’t come close to current market – a bad position to take on his part when the market is over 20% empty.   We went through a good process and got more space and at a rate that was about 20% less – and the terms were more flexible for their expansion as well.

One challenge for earlier stage companies is that everyone wants the owner to sign personally, unless they’re backed by some heavy hitter. For the scrappier startup, being a bit flexible on the layout can mean even deeper discounts on the rate, and no personal obligation on the line.

Another common challenge for the early stage organization is determining the growth path.  Will you be still getting your feet under you in a year?  Will your service or product get picked up in a big distribution agreement and you’ll need 10 times the people and space to deliver?  With a good market search you can find the landlords that will accommodate the flexibility you need to ensure that the main paths you may see or are hoping to see are taken care of.

The flexibility is possible in office space, light industrial, manufacturing and many retail locations too.  I work with firms from Tacoma to Bellingham and have seen amazing deals, so if you’re growing your company think about what you really need and want in your lease deal and with the right broker you’ll be able to get more in your favor than you’ve seen in the last decade.

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