March 28, 2013
Filing, Space Planning
Furniture, High-density storage media, relocation management solutions, richard neuman, space plan, Storage and Shelving
By Julie Weber, Contributing Columnist
5. High-density shelving is definitely not just for paper files. It is for all kinds of “stuff.” Have an extensive resource library, archival boxes of records, or even supplies to store in your office? High Density Mobile shelving can be outfitted with shelves of a variety of sizes and shapes, and incorporate drawers or even bins to fully house whatever you need to store.
4. High-density mobile units are totally customizable. Want to use metallic paint, wood veneer or translucent acrylic end panels? Go right ahead!
3. Although locking devices are available on any mobile products—making locking up as easy as turning one key for the entire unit, electronic programmable systems provide the ultimate in system security. With and electronic system, the touch pad can be configured to grant access to certain aisles only by someone who has the proper key code.
2. High-Density Mobile Storage can be less expensive than traditional filing. Take the following example: In a 18′X30′ room we can fit 42 five drawer lateral files, providing 6,930 lateral filing inches in the space at $5 – $6 per inch. Regardless of the mode of operation (manual, mechanical assist or powered), you can store the same 6,930 lateral filing inches in just 32% of the space, or you can increase your storage capacity by 316% percent for $2 – $3 per filing inch. Rule of thumb is that if you are using 5-7 lateral files in your work area, high-density mobile will save you more space and money (steel lateral files can cost as much as $800 a pop).
1. High density mobile storage saves space. Plain and simple this is the number one reason to choose high density mobile as your storage solution.By eliminating aisles, you can have the same storage capacity in half the space. You create more room for people and other activities, but you haven’t sacrificed storage space.
Julie Weber is Marketing Communications Specialist with Spacesaver Corporation, Fort Atkinson, Wisconsin 920-563-0534 http://www.spacesaver.com
March 14, 2013
Commercial Lease, Lease, Legal
CAM, Commercial property, landlord, Lawyer, lease, Real estate, relocation management solutions, richard neuman
By Bryan Mashian, Esq., Contributing Columnist
When negotiating a lease in a multi-tenant project, such as a shopping center, office building or industrial park, the parties often heavily negotiate the provisions relating to expenses of maintaining the common areas (often referred to as “CAM” or “triple net”). The concept is fairly simple — landlord recoups expenses of maintaining the areas used in common by all the tenants. But the issues can be complex. For example, the amount of the tenant’s “fair” share of CAM expenses largely depends on whether you are the one paying or getting paid CAMs. Also, defining the pool of expenses to be reimbursed often comes down to the respective bargaining leverage of the parties.
What are Common Areas
Common areas typically include parking areas, sidewalks, hallways, lobbies, public restrooms and other areas intended for common use by tenants, their visitors, and the public. Most leases allow the landlord to designate and change the “common areas” so the landlord has flexibility for development and remodeling. The tenant, on the other hand, expects the project to look like the site plan or as it then exists, and therefore may have genuine concerns about changes that would negatively affect its business. The parties can resolve these types of issues by specifying the portions of the project that can be built upon in the future (“Permitted Building Areas”), or agreeing on parts where no buildings may be built (“No-Build Areas”). Also, similar restrictions can be agreed upon regarding curb cuts and critical points of ingress and egress, and other aspects of the project which are crucial.
The Tenant’s Share
The tenant’s share is the tenant’s relative percentage of the project, which is often a fraction, the numerator of which is the size of the tenant’s space and the denominator of which is the size of the overall project. But, this share varies greatly depending upon the type of property being leased. For example, in a regional mall, it is customary to exclude anchor tenants occupying more than a specified square footage from the denominator (or the overall size of the center). In power center or neighborhood center leasing, it is more customary to base the tenant’s share more strictly on the ratio of the tenant’s floor area to the floor area of other buildings in the center. In a ground lease, if the ground leased premises include not only the tenant’s building pad but also an equitable share of the common areas, the tenant’s share is generally calculated based on the ratio of the land area of the leased premises to the total land area of the center.
Everything but the Kitchen Sink
The landlord oriented leases typically have a very expansive and extensive list of CAM expenses. The burden then shifts to the tenant to whittle down these items. Often, tenants have their own extensive list of exclusions from CAM expenses, such as ground lease rent, debt service payments, costs of casualty repair, tenant improvements, brokers’ commissions and attorneys’ fees for new leases or renewals, etc. Although most of the items on a typical list would not be included in any event, the parties must carefully review the list of inclusions and exclusions to ensure they do not unintentionally agree to an item being in or out of CAM expenses.
To avoid spending a lot of time, effort and money on negotiating CAM expenses, a tenant will often request a “cap” on its obligation for payment of CAM expenses. If such a cap is agreed to by the landlord, often the landlord will limit it only to “controllable” items of CAM expenses, which typically exclude real property taxes, insurance costs, security costs and utility costs.
Similarly, to simplify the lease negotiation process, some landlords have elected to structure their leases as “gross” leases so that the tenant pays a set rent that includes an assumed amount for CAM expenses. This lease structure avoids the parties spending a lot of time negotiating the CAM provision, and the landlord billing the tenant for CAM expenses every month. In these leases, if the CAM expenses decrease below the amount used as CAMs, the tenant does not receive any reduction in its rent.
Limitations on inclusion of capital expenditures in CAM expenses is often the subject of complex lease negotiations. The landlord sees itself as the steward of the common areas and any related costs should be passed on to the tenants. The tenant believes the landlord’s capital expenditures are long term investments that are reflected in the base rental rate. When resolving this issue, the parties often agree that some items are wholly excluded, while others are included, but are amortized over their expected useful lives, and only annual amortization is included in CAM expenses in each year of such amortization period. The parties will sometimes agree to add interest at some specified rate to compensate the landlord for time value of money.
Tenant Audit Rights
A tenant should request the right to audit CAM expenses to ensure accuracy in its billings. The landlord, however, has legitimate concerns to avoid unreasonable interference with its business operations. The landlord will typically require that any such audit be made upon a certain minimum amount of prior notice, at the landlord’s offices, not more often than once per year, and within a specified time frame. In order to avoid “nuisance” auditing, landlords also typically require that any such audit be performed only by a reputable national or regional CPA firm which is not being compensated on a contingency fee basis. The landlord will usually request that any information obtained from an audit be kept confidential by the tenant. The tenant will also request that the landlord reimburse the reasonable costs of the audit if the audit shows an overstatement of annual CAM expenses.
is an attorney with the Law Offices of Bryan Mashian
in Los Angeles, CA 90049. www.mashianlaw.com
February 13, 2013
Commercial Lease, Energy Efficiency, Landlord
Efficient energy use, landlord, relocation management solutions, richard neuman
Commercial landlords may balk at implementing energy-efficient upgrades or retrofits because of the perceived and real financial burdens they face for implementation. This may seem an oxymoron because it’s like the adage, “you have to spend money to save money.” Because savings may not be realized immediately, or they may ultimately benefit solely the tenant, property owners may look to the tenant to defray the costs by amortizing it over the lease term.
There may be a negotiable clause during lease negotiation where you, the tenant, pay a percentage based on square foot of a portion of any energy-efficient upgrades. Many landlords believe if the tenant benefits from the upgrades such as reducing common area maintenance (CAM) electric charges, then the tenant should contribute to those upgrades.
Another important reason landlords put off implementing energy efficiency upgrade projects is commercial leases don’t align the initial cost of energy efficiency with the energy savings benefits. This “split incentive” is due to standard leasing practices in which tenants typically benefit from the savings as a result of the landlord’s energy efficiency improvements. Energy conservation measures (ECMs) don’t always favor the landlord, but rather the tenant. The split incentive found in leases works against landlords who wish to make major energy retrofits in commercial buildings because the owner rarely sees the financial benefits since the savings are often passed on to the tenant. So there is no incentive to make the efficiency upgrades.
Engineers predict there can be a +/- 20% savings in energy efficient upgrades. But owner’s want to ensure a payback and tenant’s don’t want to risk paying more if the predicted savings underperform actual savings.
A solution called the Energy Aligned Clause is gaining traction because the landlord and tenant capture the financial rewards from building energy retrofits by creating a 20% Performance Buffer. The buffer limits the owner’s capital expense pass-through to 80% of the predicted savings in any year and tenants are protected from underperformance. Predicted savings are determined by an energy specialist agreed upon by both landlord and tenant. Owners are fully paid back and the period is extended by 25%. Therefore, retrofits save both money by aligning the incentive so it is not a zero sum game between landlord and tenant.
The landlord benefits by:
- Aligning capital costs to the resulting savings
- Controlling tenant’s electrical demand (high Watts/sf )
- Separating out costs for energy from other operating costs to track and expense recovery
- Providing tenants better energy consumption reporting
The tenant benefits by:
- Assurances of aligning energy efficiencies to operating costs
- Measure consumption and submetering
- Base building energy usage monitoring versus allocation of building operating expenses
- Benchmark standards for equipment replacement
See an overview of the clause at http://www.nyc.gov/eac
Great PowerPoint highlighting the advantages: http://issuu.com/urbangreen/docs/eac
For more information on the Energy Aligned Lease Clause, see the National Resources Defense Council http://www.nrdc.org/greenbusiness/cmi/energy-efficiency-leases.asp
February 11, 2013
computer, move plan., relocation, relocation management solutions, richard neuman
Computers, monitors and peripherals are essential for businesses to operate after a commercial relocation. Following a few simple steps will help protect your equipment from damage and ensure the equipment arrives at it destination and ready for re-installation.
1) Make sure your employees log off and shut down the evening before the move. Employees are usually not present on move day, so when IT or the movers come in to dismantle your system and find a password protected computer still on, their only recourse is to pull the plug. This risks data loss and/or data corruption.
2) Disconnect the wires from the monitor. If you can’t, then wrap the power and video cables around the monitor base, not the LCD screen. Wrapping cords around the LCD screen leaves the monitor susceptible to scratches from the plugs and cables.
3) Place the adhesive mover’s label with your destination information anywhere accept the face of the LCD screen. Adhesive residue can stick to the screen which is difficult to remove post move.
4) Movers usually provide 14″ X 28″ clear zip lock bags for peripherals such as keyboard, mouse, mouse pad, speakers, etc. Place all these items in the bags to keep your items together. Place two a mover’s destination labels, one outside and one visible inside the bag.
5) Label your other peripherals with the mover’s destination sticker, including the computer monitor, scanners, printer and CPU.
5.5) Pack your extension cords, power cords, network cables and any other loose items in the zip lock bag and label.
February 5, 2013
Architectural and Design, Construction, Move Management, Project Management, Relocation, Space Planning
architect, Change management, Commercial property, Construction management, Project management, Project Manager, Project plan, relocation management solutions, richard neuman, Scope creep
Change is good, if managed properly. Tenants relocate on average once every ten years and a project manager’s role is to guide and manage expectations so a seemingly overwhelming process becomes a pleasant experience. We watch the tenant’s money and project scope to assure best value for every dollar.
Scope Creep is often a term introduced into the project when intended or unintended changes arise that are beyond the original planning. This can occur at any stage in planning, design, construction and relocation. And if not identified and rectified early, it can impact your budget. The surprised tenant doesn’t necessarily hear “scope creep” but rather “$$ creep”.
The key to controlling scope creep is realizing it as a symptom, identifying the problem, assigning responsibility and mitigating its impact both on the schedule and budget. Scope creep does not necessarily mean an increase in the project size or budget, but can also be a result of the tenant’s design and budget revisions well after the plans have been approved. For instance, simple changes like adding power and data to a conference room table after construction is underway affects electrical, data, flooring and furniture plans and the resulting change order can cost upwards of $1,500. This can be addressed early in the design phase. Another example is taking delivery of furniture and finding out the modesty panels are covering your electrical and data outlets. Why? Because nobody checked with the furniture vendor or examined existing furniture that was relocated. Other issues may be out of your control such as HVAC systems not fitting properly in ceilings maybe due to existing ceiling joists or plumbing.
To minimize scope creep, you start with a detailed project program which creates a baseline that the project is measured by throughout the design, construction and relocation process. The program is created at the conceptual stage and includes objectives and goals, specific details and expectations. The stakeholders, management, vendors, maintenance staff, operations, accounting departments and all users should be involved in the process from the start. We ascertain general expectations and details right down to whether they want bottled or bottleless water dispensers which may require a water line added to the plan.
Design teams may fix problems which can sometimes lead to un-funded scope creep. Similarly, client’s can add items blindly thinking there is no additional cost. For every scope change, the client may need to find the money in the budget, so design teams are crucial here to help find acceptable and less expensive alternatives to costly products that may aid in preventing scope creep.
The client should have thorough interaction with the design team and project manager during space programming, design, construction and relocation planning and sign-off during each phase. Conduct reviews at various stages of the project so all parties can agree on scope, budget and schedule before proceeding to the next stage.
Once the construction documents are completed and construction begins, change order requests may ultimately need to be approved for unforeseen conditions or building department requirements. While scope creep may be a reality to the process, having a transparent, open dialogue and change management process for the whole team where everyone contributes for the benefit of the project is crucial to maintain quality control.
So yes, change may actually be good if the tenant can reflect back on the project after completion and know it was built right and fiscally prudent. Building it wrong so it’s on time and on budget is un-satisfying for everyone. If you proceed with a project manager at the helm and follow the project plan, the CEO, CFO, and all the other C’s will reap the benefits of planning that was orchestrated so that everyone was in sync.
January 30, 2013
Environmental, Landlord, Life Safety and Security
Cigarette, Electronic cigarette, Health, relocation management solutions, richard neuman, tenant, Tobacco smoking
Are Electronic Cigarettes subject to the same smoking policy ban as regular cigarettes? While no formal conclusions have been drawn yet by the FDA, the debate is certainly underway.
What are electronic cigarettes?
“E-cigarettes,” are battery operated devices made to look like conventional cigarettes. The user fills a reservoir with a nicotine liquid, puffs or “lights” the E-Cig, and heating elements heat and release a nicotine liquid that is inhaled and a vapor is then released. An electronic light at the tip makes it appear similar to a burning cigarette. Users of E-Cigs consider themselves “Vaping”, not smoking.
The FDA has not fully studied e-cigarettes to determine whether they are safe or if the vapor releases harmful chemicals.
Why would an employer consider banning e-cigarettes from the workplace?
Here’s some interesting issues being discussed:
- E-cigarettes look very similar to regular cigarettes, so employers may find it hard to distinguish between the two causing a potential confrontation.
- The vapor coming from e-cigarettes might be an annoyance to non-smokers.
- Permitting employees to smoke e-cigarettes in buildings where smoking is not allowed may prompt non-smoking employees question why they cannot smoke.
- Several states ban the use of electronic cigarettes
The confusion over whether the practice is considered smoking is abundant. The Department of Transportation mentioned that E-Cigs were covered under the no smoking rules saying, “Airline passengers have rights, and this new rule would enhance passenger comfort and reduce any confusion surrounding the use of electronic cigarettes in flight.” Many property owners are concerned about the “perception” it may give to others in the building including tenant and visitors. Seeing someone using an E-Cig from a distance might not know the difference between and E-Cig and a real cigarette.
What can employers do about e-cigarettes?
1. Employers are reviewing e-cigarettes in their workplaces. Federal agencies including the U.S. Department of Transportation and the U.S. Air Force have banned the use of e-cigarettes based on the Surgeon General’s report in 2010 classifying e-cigarettes as “tobacco products.”
2. Companies should revise tobacco-free policies in the workplace to include e-cigarettes as a form of tobacco. They should indicate that “vaping” with e-cigarettes is prohibited. Also, e-cigarettes are not FDA-approved cessation products so employees using e-cigarettes are still considered smokers.
3. Inquire if the use of e-cigarettes is allowed in your jurisdictions, including the workplace.
4. Building managers and landlords may be able regulate the use of E-Cigs on their property.
January 28, 2013
Architectural and Design, Commercial Lease, Landlord, Lease, Project Management, Real Estate Broker, Site Selection, Space Planning, Tenant Improvement
General Contractor, landlord, lease, Leasehold Improvements, Project management, Real estate broker/agent, relocation management solutions, Tenant Improvements, TI Work Letter
What happens when the Tenant Improvement (TI) allowance is not enough to cover the cost of the landlord’s turnkey construction? Tenants often find themselves paying the difference in the cost. So how should you handle the TI allowance issue when costs exceed the landlord’s offer?
Whether the cost of improvements are over or under the allowance, the TI is the tenant’s money since they are paying it back over the term of the lease. Therefore, the tenant should try to receive the best value for their money. You should always insist the landlord include their standard TI’s in the lease so you can compare all the proposals you receive from the buildings under consideration.
We always request a breakdown of the allowance in our requests for proposals because a detailed TI limits future change orders. For example, we often come across TI’s that don’t include window treatments as part of the base building build out. Tenant’s often find this out after relocation when the sun is baking their office and realize there are no blinds. Why? It wasn’t specified in the TI and now the landlord won’t pay for it post construction.
Though it may be difficult to obtain a definitive lease rate without full sets of construction drawings to price out the job accurately, one option is to ask that the initial lease rate offer a TI estimate per square foot. This might give you a clearer comparison and also allow your broker to have leverage during negotiations after space planning. Once you narrow down your selection of buildings to a few properties, you can work towards comparing the landlord’s cost for their turn-key construction.
The landlord’s goal is to get you in the space as quickly as possible in order to get the rent clock ticking. In a turnkey build out, most landlords control the contractors so you can assume they are squeezing the best prices out of them. To achieve minimum cost and timely construction, it may lead to corners being cut and items often gone missing from the original plans and too costly to fix if identified late in the project.
But what if you want to bid the project out yourself? Some buildings may permit the tenant to take the cash and have the space built out themselves, while other buildings may have an “approved list” of contractors and subs. But the latter is similar to collusion because the approved contractors still work for the landlord. Many landlords can inflate their costs with administrative fees and higher costs such as mechanical, electrical and engineering plans.
You can take the cash for the TI and apply the funds to construct the space yourself. That way you control the construction and obtain all the tax benefits for leasehold improvements. Tenants who manage their own construction projects have complete control over the finished product and generally get more bank for the buck. Tenants who proceed with construction should also hire a project manager to run the project and act as an advocate/liaison on their behalf.