There's Aways a Silver Lining

Discussions about the "looming recession" are hard to avoid if you are even the most infrequent purveyor of cable news. One might think that some pundits almost want it to happen. Nevertheless, there is some truth to what's happening out there.

Over the last several years, consumer spending (measured more specifically by retail sales) has driven a stout U.S. economy, increasing almost 4% every year. But by October of 2007, spending was only up 2.4% from the same time in 2006, indicating that consumers are starting to be a bit more careful about their spending decisions.

That annual spending growth was rooted in an ever-increasing employment base, the housing boom and the easily obtainable debt that helped fuel it. Today, real estate financing is not nearly as easy to come by and new jobs were down to 125,000 per month, a 34% decrease from last year. With these economic enhancers now limited in what they can bolster, the diminished results begin to show up on the economy's bottom line.

Companies feeling the impact of the consumer slow down have to react accordingly when it comes time for office renewals or relocations. Once excited about expansion into larger space, many companies now need to scale back, leaving available space landlords were projecting their growth would occupy. As a result, other tenants may find themselves staring at cheaper space as landlords cut deals to fill the unused portions of their buildings.

The same situations could be found in the industrial market. As demand for warehouses used to store and process commodities begins to fade, larger business-to-business manufacturers needing equipment and mechanical space could lease or sublease space once set aside for consumer goods.

So if your business is one that can sustain a less aggressive consumer base, it may be time to take advantage of landlords seeking more stable tenants, especially as developers continue to build, providing more product in what some might say is a questionable time.

In the end, the facts about economic fluctuation always seem clouded by some random federal department's quarterly statistics or the results of a "flash poll" given to employees of NASDAQ and posted on CNN.com. Underneath it all, what really counts is how your business can respond to a changing business climate. And as situations arise that impact real estate decisions, remember to keep in touch with your tenant representative to understand options and if needed, create an appropriate strategy.

Lease Buyouts Can Work for Everyone

A good commercial real estate lease is about options. First rights of refusals, fit-up allowances and flexible floorplans. The more agile you can be when in your lease, the better the deal you signed. The same can be said for getting out of your lease or eliminating unused space. The more options you have, the easier the exit. And when that situation arises, a lease buyout may be the way to go.

Buyouts are functionally pretty simple: a tenant pays a landlord a sum based on the remaining terms of the lease in exchange for being able to move out or reduce square footage. It can also involve the landlord's recapture of fit-up costs and all other fees incurred by your occupancy. And like all business deals, things need to be negotiated. However, settling on terms can lead to rough waters because on the surface, it appears the landlord has the upper hand. Thus, it's absolutely crucial that both sides of the table communicate openly about their needs. It is in these situations that your tenant representative, by knowing the undercurrents of the market, becomes a very high-level business partner.

Landlords may already be prepared for your exit or reduction in space but in some cases will be negotiating with the opposite stance. Your tenant rep can counter this position by knowing if potential new tenants have already inquired about the space or are at least actively touring the market. In turn, they can help the landlord realize the marketability of the soon-to-be-available space. Additionally, specific insight into the landlord's financial exposure, as well as historical data on their risk tolerance with tenants, is invaluable when negotiating position for a buyout.

The details of a lease buyout, even a small one, are complicated for everyone. If handled improperly, your business may suffer a dent in its reputation and lose some ground when it's time to negotiate another lease. By remaining professional, ethical and open, you'll come away with your business character intact and a more streamlined operation.

Web Sites Can Help "Green" Your Next Office Move

From packing cubicles and backing up networks to meeting with architects and attending construction job meetings, settling into new office space can have a substantial impact on a business - and the environment. Moves tend inspire people to organize and thus dispose of unused office supplies, paper, boxes, food and even furniture. Add to the rapid accumulation of waste the impact of a fleet of moving vans, back and forth commutes to the new space and the presence of fit-up teams and their energy needs. So by today's standards, most office moves are anything but environmentally friendly.

At the heart of man's role in the global warming debate is the concept of our "carbon footprint;" or, how much the carbon dioxide we expel contributes to the depletion of the atmospheric blanket protecting us from the sun's radiation. To remedy that impact, organizations have begun to offer "carbon offsets," as a method for tipping the green scale -at the very least - back to the middle.

Organizations currently providing carbon offsets are TerraPass, CarbonFund.org and BeGreen. A carbon offset is simply a donation to an environmentally-conscience effort, such as a wind energy plant, landfill gas capture or farm waste management project. Each group channels its effort through extensive Web sites (TerraPass.com, CarbonFund.org, and BeGreennow.com, respectively) that offer carbon calculators to adequately measure the impact your cars, moving vans and planes have on the environment.

The true benefit of carbon offsets has no shortage of detractors, however. Many debate providing money to projects whose funding is already in place and would continue to thrive regardless of the money a company donates through offsets. Like all socially controversial causes, it's important to perform your own due diligence and react accordingly. And it's critical to note that carbon offsets should in no way replace a person's or business's every day effort to conserve.