Many creative and technology companies gravitate to loft office buildings due to their unique character as they are typically renovated warehouse buildings (either concrete or timber construction). In addition to the usual office building due diligence, below is a checklist that tenants should use in evaluating loft office buildings. To thoroughly evaluate a loft office building, a tenant should consider the assistance of a knowledgeable tenant representative, project manager, architect, engineer and general contractor.
Author: Don Wenig (page 5)
Creative Office Space Trends
Just exactly what is “creative office space”? What are today’s tenants looking for in office space? How are building owners accommodating this demand? Those questions were addressed a couple weeks ago at the Chicago Creative Office Summit. It was a roundtable discussion among architects, engineers, developers, a furniture vendor, a general contractor, building owners as well as office co-location companies. Here are the 10 key takeaways.
Tenants’ Top 10 Office Leasing Mistakes
As real estate is typically one of the top costs for companies, here is a list of the top 10 mistakes tenants make in leasing office space. The real estate decision, however, goes beyond cost. It also impacts the bottom line in terms of employee productivity as well as employee retention and recruitment which is becoming more and more important today. This is based upon the joint experience of me (being an attorney by background, with 20 years of representing office tenants locally and nationally) and nationally recognized commercial real estate attorney Ted Yi, Co-Managing Partner of Quarles & Brady, with over 25 years representing office tenants and landlords (locally and nationally).
Not Your Father’s Office – Office Space Trends
In the late 1960’s, Herman Miller, an American manufacturer of office furniture and equipment, spawned the idea of office cubicles. The cubicle’s popularity was sustained until about 10 years ago, when companies began to notice that the way in which people worked was changing; people were collaborating in small teams as well as relying on portable electronic devices that do not require that they be “tethered” to a fixed workspace.
Insurance Overview for Office Tenants
Insurance is one of the keys to addressing the risk of casualty. Tenants need to keep in mind and remind the landlord that they are paying for the insurance through their rent either directly as an Operating Expense or indirectly through its gross rent.
While office leases are drafted by landlords, they impose obligations on the tenant for insurance, but are usually silent on what insurance landlords are required to carry. Savvy tenants need to carefully review this provision with their risk managers and insurance agents to be sure they have adequate coverage as does the landlord. Below is a quick recap of key insurance concepts that should be considered in an office lease.
How Tenants Can Prepare for the Unthinkable
Hurricane Sandy devastates the northeast. As recently reported on Bloomberg (http://www.bloomberg.com/news/2012-11-09/lower-manhattan-quiet-as-sandy-shuts-one-third-of-offices.html) 33% of the 101 million square feet of lower Manhattan’s office space was inoperable as of November 7th, several days after Sandy’s landfall. Likewise, immediately after 9-11, areas of lower Manhattan were closed off for months. Manmade disasters and storms are not just limited to New York or the coastal areas. In 1992, Chicago’s Central Business District was closed for days due to a flood of an abandoned underground tunnel system. Falling into the trap – “it’ll never happen to me” – many tenants and landlords pay short attention to the lease provisions pertaining to a casualty. Outlined below are steps tenants can take pre-lease and during lease negotiations to safeguard their interests. Also addressed below is where there is no damage to the building, but the building is inoperable due to lack of utilities, access, etc. Most leases, however, do not provide the tenant with any rights if they are denied use of the building without building damage. Under a separate post, I address what tenants need to know about insurance.
Overview of Tenant Improvement Strategies
While many lease provisions never come to light for tenants, there is one that all tenants face after the lease is signed: the Tenant Improvement Provision a/k/a “Work Letter”. Given the amount of dollars at stake and its operational significance to the tenant, it requires the utmost attention. 
Tenant Improvement Strategies – Allowance Approach
Under the Allowance Approach, the tenant is allotted a cash allowance from the landlord for construction and related costs. To the extent the total costs are less than the allowance, and if properly negotiated, the tenant retains the savings. On the flip side, if the costs exceed the allowance, then the tenant bears those excess costs. Outlined below are the pros and cons to this approach, common pitfalls and strategy to successfully implement.
Tenant Improvement Strategies – Turnkey Approach
As the name implies under this approach, the landlord – at its sole cost – is responsible for all elements of construction based upon an agreed to scope of work. Many tenants are attracted to the simplicity of this approach, but if not properly structured and implemented can lead to unwanted financial surprises, delays as well as a space that is not constructed to meet their needs. Outlined below are the pros and cons to this approach, common pitfalls and strategy to successfully implement.
Australia uses the Stick to enforce Sustainable Office Space Requirements
As one of the vanguards in environmental sustainability of commercial properties, Australia…