13.5 Important Tips Before Leasing Industrial Space

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loading_dockIndustrial and warehouse space can range from manufacturing and storage, to distribution such as pick and pack facilities.  Each building you consider will have its own set of concerns so have a good understanding of the use of the facility and make sure you ask questions of the landlord to match your needs to the intended space.

Here’s a quick 13.5 starter tips:

1. HVAC – Most industrial buildings don’t have full building A/C as it may only be provided in finished space.  Because you will have no idea how the HVAC system was maintained by the previous tenant, avoid assuming responsibility for HVAC that may have been neglected. Negotiate you will purchase an HVAC maintenance contract to maintain the existing system.  However, should the unit fail, the landlord is responsible for replacing the unit.  Obtain documentation that the unit(s) have been inspected and certified that they are in good working condition.

2. Operations Costs – Identify what can be excluded from operations costs such as roof repairs versus what’s included as part of the Landlord’s costs such as window and glass replacement.

3. Capital Repairs – Predefine capital repairs. In an older building, landlords often exclude replacements of a structural or capital nature, opting to repair rather than replace and defer the cost to the tenant.

4. Square Footage – How the landlord calculates square footage was the subject of one of my previous articles: WARNING: Ascertaining the “correct” real estate square footage can be a minefield fraught with peril!  Many landlords “grow” the size of their buildings by including the area beneath the drip lines as part of the leasable area. Pay only for the usable square footage, which reasonably can include the wall thickness.

5. Parking Lot – Exterior parking and asphalt requires maintenance and landlords may make it the tenant’s responsibility. Repairs should be performed and paid for by the landlord because it’s a long-term performance issue for future value retention. What is the assigned parking for the building and is it enough?

6. Zoning – Check zoning to identify the building’s parking ratio (spaces/1,000sf) to ensure the property meets zoning requirements. If you need more parking than the code requires, look for another property. Is the area properly zoned for the intended use? Many tenants think that they can operate their business under the current zone, which may or may not be the case.

7. Property Maintenance – Ensure your lease spells out property maintenance as you may be responsible for landscaping and snow removal.  Trash removal is usually the tenants cost.

8. Trailers – Know the type of vehicle and their weight fully loaded to ensure your docking area will support it. Check if there is maneuvering room for an 18 wheeler.  Trucks and trailers have become longer where 45′ trailers were the norm years ago, now they are 60′ which means you need 120′ turning area. Many older buildings cannot accommodate the longer tractor/trailers.

9. Electrical – Check electrical capacity is adequate for your facility. While the breaker panel and meter may indicate sufficient power, you don’t want to be underpowered or blow a transformer. Hire an electrical engineer to survey the building for your needs such as number of Amps, the service size – 240 or 480 volts, etc.

10. Ceiling Heights - Tall ceilings over 28′ will need level floors. The higher you can stack racks the less tolerance for the height of the racks to tip over. Like kid’s building blocks, the higher you stack, the more likely they will fall.

11. Neighbors – Know what options the adjoining tenants have to know if expansion can be done in the future by either party. If your neighbors want to expand, negotiate a clause whereby the landlord will move you at the landlord’s cost.

12. Bathrooms – Insist existing restrooms meet ADA laws. See my previous article: I’m renovating my office, does the existing bathroom need to be ADA Compliant?

13. Floor Load – What is the live load for the slab versus your intended use?

13.5 Energy – What is the annual energy cost per square foot for the occupied areas or what is the Energy Star Rating so you can negotiate the greatest energy efficiency improvements. If the landlord has not conducted a commercial energy assessment, make sure they are willing to perform one as a basis for negotiating tenant improvements

Richard Neuman is an Owner’s Rep and Move Consultant with NY based Relocation Management Solutions, Inc. www.relocationmanagement.com

Power to the People! – errr – Cubicle

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powerDid you know that in NYC and many smaller municipalities like Garden City, LI, power strips are illegal in commercial offices?  You are not permitted to extend the number of receptacles beyond what is hardwired. If you need four outlets in one location, then you must install two duplex or a quad electrical outlet.

Now, walk around your office cubicle areas and take note of how many people abide by the no power strip rule.  Probably nobody. In fact, unless your facility or office manager does a visual inspection and confiscates them, power strips are used in abundance, and you’re the one who probably ordered them for your staff.

I recently performed inventory of a client who will be relocating. Their existing panel system has only two duplex receptacles per cubicle and here’s what I came up with:
(1) PC
(2) Monitors
(1) Printer
(1) Scanner
(1) Pencil Sharpener
(1) Label Maker
(1) Radio
(1) Fan
(1) Cell Phone
(1) Tablet or Laptop

That’s (11) devices for four receptacles. 

So what do you do? Well, it’s a Catch-22. Many cubicle systems may be pre-wired with only two (2) duplex outlets or four (4) receptacles.  The corrective action for existing systems furniture is to add cubicle power harnesses, which may require additional branch circuits to the electrical panels. But rather than pay for the hardware and an electrician, companies find it more cost-effective to take their chances with illegal power strips. They pin their hopes that the building inspector or fire department will neither visit their offices during their ten year lease, or if they do, that the officials will turn a blind eye.

Of course this can be easily rectified during relocation and many question what is considered “standard” these days? Some will advocate for three (3) duplex outlets; other’s will say four (4) duplex receptacles. It really depends on your needs. The key is taking a detailed inventory, consolidating devices like printers and scanners into central locations, and being creative.

It’s no secret that panel system electrical technology lags behind what is available for everything else. For instance, my inquiry about quad receptacles revealed it is not available as common hardware of the four manufacturers my client is considering. Furthermore, an outlet with dual USB charging ports would remove two power supplies which is now common for standard wall outlets.  But the manufacturer’s reps glaze over at the mention of it for panel systems.

Three things we are considering:
♦ Wiring harness with two (2) duplex outlets at baseline and two (2) duplex at beltline for a total of eight (8) receptacles.
♦ 2-port after-market USB charging/single outlet station for the cell phone and tablet. Beware, you’ll likely engage in finger pointing as to who is responsible for installing them, the furniture installer or the IT folks.
♦ Power and USB receptacle’s in the monitor arm (which seems to me to be an extension cord, but shhhhh)

Whatever configuration you choose, make sure your MEP (Mechanical Electrical Plumbing) Engineer is fully cognizant of your plans early because this will impact the electrical design and circuit panels.

Richard Neuman is an Owner’s Rep and Move Consultant with NY based Relocation Management Solutions, Inc. www.relocationmanagement.com

Do I Need a Fan or Supplemental AC in my IT Closet?

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MeltingOne area of design I find consistently overlooked is the small IT closet. In the last month, I’ve seen a few 5,000 sq ft pre-built offices or spec spaces where the landlord provides a very small IT closet. But look up in the IT closet ceiling and there may be no sign of mechanical cooling equipment or even an exhaust fan.

The reason I regularly hear from landlords for this oversight is that because it’s a small room, there’s not that much equipment or heat to be generated. Therefore, there’s no need for conditioning.

Hear this, just because the closet is small doesn’t mean it doesn’t generate heat that could potentially be harmful to your equipment.

Now if you’re a tenant thinking of moving in, you’re probably visualizing your current IT closet that’s overheating and tried the following remedies:
1. Leaving the door open
2. Brought in portable cooling
3. Exhausting the hot air into the plenum
4. Louver the door
5. A number of other methods to keep your equipment from shutting down.

So what do you do in the new space?

When you’re dealing with spec space, your options are limited because the mechanical design has already been completed.  You’re left with figuring out how to drop in a Mr. Slim Unit and where to place the condenser; or adding an exhaust fan which is marginally helpful; dumping building air into the closet – but what happens when it shuts off at 6pm?

According to Morais Miranda, RCDD, president of New York based Technology Solutions Design Group, he advises if your power consumption is at least 5kVa, the minimum needs for an IT closet is a 1.5 ton unit minimum. That’s not a lot of gear in the rack to generate that kind of output.

Here’s the basic formula to calculate your needs:
Watts = Amps x Volts
1 Amp @120 Volts = 120 Watts
1 Watt of Power = 3.412 BTU
3.412 BTU x Watts = X BTU
1 ton of cooling is 12,000 BTU/hour, not counting people load

So to calculate a 5kVA = 1.5 Ton AC unit:
5000 x 3.412 = 17060 BTUs/12,000 BTU = 1.42 Ton

If you can’t do A/C in the new space, then you should at minimum louver the door, dump building air plus add an exhaust on a thermostat.

Due Diligence Is Critical in Commercial Real Estate Transactions

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By Link LeGrand, CCIM Contributing Columnist

Financial due diligence is the process of verifying all statements of fact (or “finding where the bodies are buried”) for a property you are considering purchasing.  Proper due diligence is not a simple matter and normally takes weeks or sometimes months to complete.

One of the most crucial aspects of due diligence is determining the financial health of the property. This indicates whether the building is currently showing a profit, and if not, what actions you can take to make it profitable.

Income and expense statements
Statements of income and expenses are by far the most important part of your financial due diligence. These statements show what the seller collected in income from the tenants as well as what was spent to operate the property. At the least, you should obtain annual income and expense statements for the past five years.

Rent rolls
A rent roll is a list of all the units/tenants in a property and how much each is paying in monthly rent. It shows each tenant’s name and unit, the price per square foot and the total amount of rent paid. It also shows each tenant’s move-in date, lease terms, expiration date and whether the tenant has made a security deposit and, if so, how much.

Once you obtain this information, make sure the rent amounts stated on the reports match those shown on the leases, and compare all this information with the income and expense statements you received.

Tax returns
These may be harder to obtain as most sellers do not wish to disclose their tax returns to strangers. However, this information is essential in determining if the income and expenses shown on the tax return match those on the reports you were given. If they don’t, then either the seller has been misstating the income or some other mistake has been made.

Lease agreements
You should have an attorney review all the lease agreements on the property to determine the tenants’ rights as well as your right to either terminate leases or raise rents. You should also use an estoppel letter to verify the leases. This is a request-for-information letter that you would send to tenants to ask them for information on their leases. It will help you determine whether the document you were given is true and accurate and represents all the agreements between the seller and tenants.

Utility bills
This information should be listed on the expense reports, but you should compare it with the actual utility company bill and confirm the figures. This includes costs for electricity, gas, water, sewer, trash removal, telephone, cable and Internet services.

Property tax bills
Again, this information should be listed on the expense reports but you still should verify it with the taxing authority.

Financial due diligence is critical in determining whether you are buying a property with a positive cash flow or one that is going to cost you money every month. It’s well worth the time and effort.

Link LeGrand, CCIM is VP/Director at KW Commercial SA, Brokerage, Leasing and Development in San Antonio, Texas. Website: www.kwcommercialsa.com Email: Link@KWCommercialSA.com  Tel: (210) 789-5465

TV Studio Site Selection 101: Finding the perfect inefficient, windowless, cold, power hungry space.

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Broadcast studio facilities are technological wonders that produce some of our most enjoyable entertainment within its four walls. Behind the cameras and glamour, though, is a windowless, soundproof, power consuming hog that probably won’t win any energy efficiency or daylighting awards.

When selecting a building to retrofit for a studio facility, it’s more than just large space and tall ceilings to suit the needs for live television. Broadcast facilities face many idiosyncrasies and spoilers that challenge real estate brokers, and is magnified especially in horizontally and vertically challenged locations such as New York City.

TV studios are sized for different applications.  An “Insert Stage” is often a small studio useful for one or two-camera “talking heads”, satellite media tours or product shots. Its average size is 1,500 square feet +/- 1,000 sq ft. Larger stages suitable for audience talk shows average 3,500-15,000 sq ft behemoths and larger. This article focuses on large stages.

Brokers in site selection phase are generally searching for space with the following parameters:

Location, Location, Location – Talk shows often choose stages that are situated in areas where there’s access to high foot traffic, mass transit or easy parking. Talk shows will shoot 2-3 shows per day and must keep a flow of 200+ audience members for each production.  Location aides in filling audience seats when attendance might be low. Location may also be a factor in determining the on-screen talent’s decision to choose your stage such as ease of booking guests, commuting to or from airports, or ease of getting around town.

Acoustics – While “Location, Location, Location” is often the rallying cry of most studio executives during site selection, “Audio, Audio, Audio” is the primary concern of most facility engineers during this phase. Sound and acoustics can be the biggest spoiler to any facility’s success and not addressed properly, can be the single studio killer.  Sound transmission from existing interior infrastructure and exterior noises must be analyzed for a studio to be successful.

Studios are acoustically constructed to mitigate sounds. Audio engineers check for a building’s acoustical properties, isolation, diffusion and absorption of reflected sound that could compromise audio heard through  speakers.  Sound and vibration will travel through poorly insulated walls, holes, broken seals and gaskets, windows and air vents.  In live television, there are no second chances.  Ambient sounds will be picked up by microphones and recorded or broadcast live so not every space will work.

Here are some issues I have encountered that have compromised audio including:
– Selecting a building near an international airport or heliport with the roar of engines and choppers overhead; Choosing a low floor near the rumbling of a subway directly below; Choosing a building with squeaky wood plank floors that amplify footsteps and squeaks from areas outside the studio; Selecting a building next to an industrial location with forklifts dropping pallets and backup warning tones beeping.

Yes, there are ways to minimize or eliminate these issues through construction, but the costs may be burdensome.

Column Free Space with High Ceilings - For the NYC RE brokers, I might as well have written wuh-wah-wuh-wah-wah. Existing expansive column free space with high ceilings is hard to come by here in vertical buildings as compared to other markets where success can be found in horizontal sprawl.

Column free space allows productions to construct large sets, sometimes several on one stage; backstage area, audience risers, and there are no impediments to camera angles. High ceilings allow optimal lighting grid heights which might be at least 20-25′, though many existing buildings have ceilings that limit grid heights at a maximum of 13′.  There also needs to be space above the grid for HVAC ducting.

Floors and Ceilings – Squeaky creaky wood floors contribute to ambient noise in television production. Concrete floor and ceiling construction to minimize unwanted sound transmission from above and below is more desirable.  Generous floor loads should be capable of supporting audiences and vehicles used in production.

Power – Studios are energy pigs.  Power consumption for studio lighting, equipment and HVAC is quite high. Brokers need to assess the studio’s planned needs and inquire what costs will be assessed to bring in additional power to the space.

HVAC – Lighting is hot, audiences generate heat and humidity, control rooms and engineering spaces also generate tremendous heat loads. Studio HVAC systems must be designed to cool down hot stages, as well as address heat generated in audience holding areas, control rooms, engineering and production spaces. Systems also have to be silenced so the whirring of air handlers are not picked up by microphones.  This is achieved by installing  large ducts so air handlers can be slowed down, lined ducts, bends in the ductwork to tamp down air volume and sound baffles at registers.

Production Space – These spaces can include production office space for long-term talk show clients, video control rooms, audio control rooms, set construction, props, scenic storage, lighting storage and dimmer room, engineering, editing rooms, voice over booths, audience holding area, wardrobe, make-up and hair, showers, green rooms, studio staff office space, graphics design, to name just a few.

Large Freight Elevator – Used to transport sets and vehicles from the ground to the upper stages.

Access to Fiber or Microwave Line of Sight – For facilities to transmit its signal to an earth station or video switching center, the building must have access to video fiber or line of sight from the roof to a microwave facility.

Summary
This is a specialty area that is much more involved than your typical commercial real estate search.  Brokers need to be engaged and versed in production to understand the full scope of the facilities needs in order to present space worth considering.

Richard Neuman is a broadcast facilities consultant with owner’s rep firm Relocation Management Solutions.  Neuman is former General Manager of NYC’s Times Square Studios and Vice President of Broadcasting, Facilities and Technology at News Broadcast Network.

When Should A Tenant Project Manager Get Involved? From The Very Beginning.

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How do you convince the Owner/Tenant to bring on the project manager early?  The Tenant Rep Project Manager or Owner’s Rep brings many things to the table before the project is in pre-construction. Plan reviews, scope writing, budgeting, etc.  It’s important that they get involved from the beginning, even before the design team to help guide the owner to good decisions and relationships.

The Owner’s Rep manages who engage early and manage all aspects for the tenant. They understand the tenant’s perspective to guide brokers, vendors, consultants and the design and construction team.

The tenant improvement work letter or TI is the critical document that lays out how the landlord might build a space. Take a law firm for example. Lawyers don’t want their closed-door conversations heard in the next office or outside the conference room. Does the TI specify high Acoustical rating on ceiling tiles or acoustical treatments in the wall cavity? How about floor to ceiling sheetrock to minimize sound transmission? Does the TI specify the number of outlets per square foot? Lawyers typically have cpu, 2 monitors, cell and tablet chargers, dictation, phone transformer. How does the landlord address this when multi-outlet extension cords are often illegal? Did you provide enough power for paralegal cubes who often need at least six receptacles. Did you calculate the floor load for your high density filing system? Brokers don’t always address these issues during lease negotiations.

PMs guide the tenant by asking questions to help them understand the full parameters of the project and the full value of an owner’s representative’s services: what are your objectives for the project? what is your program; how did you arrive at it? have all the stakeholders contributed to that program? do you have an overall project budget including planning, design, engineering, energy analysis, permitting, temporary facilities, owner-furnished items, inspections, commissioning, furniture, fixtures and equipment (FFE) as well as construction? If so, how was it developed? Are there constraints on financing that have to be considered in project planning and execution? Do you have an overall project schedule? What are the constraints on that schedule? How might those constraints influence decision in the delivery method of design-build vs design-bid-build vs fast track with a CM at risk, etc.

By asking these questions, it gives a quick insight into to the status of the project and the owner’s resources and sophistication. It gives a platform to overview the value of an OR’s services, and gives the owner an immediate sense of what it would be like to have a PM on their side throughout the project.

OR/PMs are often referred to as “Construction Managers” and the downside to being labeled as such is the tenant thinks they don’t need you until the construction starts. And if the landlord handles construction, they don’t think you’re needed at all. It makes sense that the tenant could easily see value just in the perceptive questions being asked. It is a very small price to pay to avoid unwanted delays and claims.

Don’t Shut Out Employees During New Office Planning.

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Employees have feelings too, you know. Do these complaints sound familiar during move planning? “We don’t know what’s going on;  they don’t tell us anything.”  How about post move complaints? “Had they included us, this oversight never would have occurred.”

During the new office planning process, senior management often builds a wall not shown on any floor plan but physical nonetheless. It’s a barrier that shuns critical involvement by managers and staff.  While management believes that too much involvement will lead to an unproductive environment, often just the opposite is true. Excluding employees from the move process leads to poor planning decisions only realized after move in.

For a successful relocation plan, it is necessary to communicate with key leaders such as department heads from the beginning of space programming through physical relocation. A move committee should be assigned for the duration of the project and should include an outsourced project manager or move consultant who will manage, disseminate and coordinate the information as needed.  People like to know what to expect and department heads usually have good insight into how the changes can improve their workflow.

How many times have we heard that tenants often outgrow their new space before they ever move in due to poor internal communication that led to poor space selection and planning?  Space needs are more than the number of offices, conference rooms, cubicles, growth, loss factor and circulation. For an office to be sized and designed properly, it is important to consider the needs and working relationships of all internal departments BEFORE site selection. See Space and Adjacency- Maximizing the Efficiency and Layout of Office Interior Space.

The morale of the employees has to be kept high otherwise dissatisfaction leads to a disgruntled staff.  Most companies are so secretive that the first realization of problems occur when the employee’s first glance at a proposed seating chart. For many companies, this first encounter is not a pleasant experience. Employees should be encouraged to participate in the planning process so they get used to the new environment.

Critical information is not about move committee input but factual logistics such as “Our Sales Group cannot be separated from the Marketing Department” or maybe they cannot move on a particular date because it may disrupt a pending company-wide initiative.  A project manager collects, communicates and is responsible for coordinating these details that don’t really fall under any particular discipline on the team.

It is this kind of communication and education about the process that leads to a successful outcome. Even planning for simple issues like hanging pictures, certificates, bulletin boards, etc., help to make for a smooth transition.

Including the staff who will be moved reduces anxiety and allows for questions and concerns to be addressed in advance.

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