By Ron Bockstahler
The most common question I’m asked lately is “What is happening in the office space sector?”. With a client base of over 800 law firms and businesses, I usually have a good read on what is happening in the office sector of the real estate industry. Throughout June we have seen an increased demand for office space, but more specifically, the demand for flexible office space has been a top priority. Clients are placing a high priority on office flexibility and cost controls in their office selection.
JUNE CONTRACTS
This last week of June alone, Amata signed 12 contracts and/or amendments with existing clients and new clients. Eight of these were to take additional or new space and four were to reduce space. One virtual client, converted to have a full-time office and a California based law firm sign an amendment to have Amata manage their phone system and answer their phones. In each conversation clients were focused on cost controls by exercising the flexibility in their agreements.
FLEXIBILITY
Not included in the above-mentioned new contracts is a 500+ employee New York based law firm, that renewed their agreement with Amata, adding additional offices. The deciding factor to remain with Amata versus signing a lease for their own space was the flexibility Amata provides. Adding or removing an office during the contract term, without any penalty is crucial in this business environment. Another firm dropped an office from their agreement the first week in June, then added a workstation this past week. Successful firms are adapting to the fast-changing business landscape and controlling costs by taking advantage of the flexible lease and staffing solutions provided by Amata.
COMPETITIVE ADVANTAGE
One of Amata’s greatest competitive advantages is the flexibility to manage expenses quickly to match changes in revenues. The cost structure with traditional office landlords makes it impractical and unprofitable to provide tenants this type of flexibility. When a company signs a lease, the landlord amortizes the cost to build-out the space, cover concessions, and brokers fees. Amortized costs do not go away when tenant downsizes and no longer requires all the space. Expanding beyond the initially leased space, without increasing the lease term, further locks in fixed expenses.
Learn more about how you can add flexibility and cost controls to your office expenses by contacting Amata.