Four Simple Strategies to Leasing Office Space - Office Space Leasing in Los Angeles

Client Case Study – Drakard Consulting

From the desk of John Scatoloni, June 2008, Focusing on core competency drives success in a slower economy and cutting costs is a vital tool in achieving this goal. As many international firms are experiencing slower sales and lags in account orders, CFO’s are faced with measures to reduce overhead while not to impact core professional services and the cohesiveness of an operational environment.

At Encon Commercial in Los Angeles, our real estate advisors incorporate key cost cutting strategies into our client’s commercial real estate concerns, while offering direction on the intangible value of increasing leasing options, minimizing occupancy costs and aligning space needs for growth within the overall business plan.

Case in point, Drakard Consulting is a global leader in the field of consulting management and executive staffing with offices in Southern California. Like so many retail space users in Los Angeles, Drakard was neither immune to the general market fluctuations, nor prepared to accommodate a landlord push for orbital lease rates. Our real estate advisors identified four strategies to avoid premium leasing and to drive overhead costs down; strategies that will work for your next office space.

Implement the 80/20 Rule of target leasing in appreciating market conditions. Simply stated, using our market expertise and an eye for efficient space layouts, Encon provided the market options for Drakard that met 80 percent of corporate layout needs while only requesting changes for 20 percent. At Encon, our advisors place the highest value on keeping costs down for our clients, including this strategy to avoid add-on improvements, additional rents, and enhanced security deposits to compensate for premium improvements to space. Ruling out these build-to-suit scenarios saved 5-10% of the lease commitment from day one.

Alternative Space Selection is the proverbial “Ah-Ha” of commercial real estate, thecreative solution to occupying physical space. Encon advisors introduced alternatives to premium “Retail” space by identifying “Ground Floor” Class “A” office space which functionally rivals retail by offering visibility and over-standard amenities including, lobby exposure, multiple-signage opportunities, open floor layouts, floor to ceiling window lines and above all, lease rates 10-20% less than retail. Augmented by a fullservice tenant friendly lease and a boost of corporate image, the take-a-way for Drakard was an upgrade in market presence and the affordability of additional space for growth.

The Stolen Play Book remains one the greatest faux pas of site selection where a tenant engages a landlord to negotiate and structure a lease commitment on their behalf. Similarly, on game day your coach hands over a well-practiced and proven playbook to the other team, and no surprise, all advantages go to your counter-part. At Encon, our advisory team brought a third-party position to the Drakard lease negotiations in order to secure business critical lease terms and trade strong credit for flexibility. Our single-point of accountability from start to finish delivered Drakard turn-key space, a shorter lease commitment, an exit clause and fixed rate options to renew. Engaging Encon was “insourcing” the expertise to plan beyond today, which translated into capping future overhead expenses, and removing market risk for our client. While other tenants close one eye to future obligations, Encon saved Drakard a 15-20% in scheduled overhead increases four years in advance.

Aligning strategies for leasing is founded in Identifying Propitious Conditions at hand. Tenants rarely follow the day-in, day-out market fluctuations and potential arbitrage in leasing. At Encon, our advisors illustrate both the market opportunities and the level of service provided by each landlord to our clients as two distinct but inseparable sides of the same coin. Hence, Drakard was presented several retail lobby spaces in Class “A” office buildings in target markets due to this year’s mortgage melt-down. Highlighting a series of fully engaged landlords looking for strong credit, Encon brought both elements into negotiating the space on the Tenant’s terms. Alternatively, how your company decides to spend resources on leasing will depend on aligning opportunities in both market timing and landlord’s leasing conditions. Orchestrating these incentives into a transaction is what Encon does best, a service that we provide to each of our clients. As a result, Drakard collectively saved resources at each stage of lease construction and Encon afforded the concessions that Drakard needed in this complex and landlord dominated market in Los Angeles.

Above all, our advisors suggest using all four approaches to formulate a leasing strategy. Each has proven successful in our portfolio of Tenant Representation, and in a down market saved our clients over one-fourth of their rental costs. Finally, where achieving cost savings is paramount and retaining a professional presence is essential, Encon advisors are a valuable “in-source” in deal making expertise. As for Drakard, engaging our advisors at Encon Commercial made the difference between a premium lease commitment and an overall reduction in overhead expenses.

Contact Encon Commercial today for a tailored strategy of your own, one that meets your long-term and cost conscious objectives.

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