by Daryl F. Mallett
Just starting a small business is a
big decision in and of itself. Once the decision is made to move ahead, many
entrepreneurs start from home, working out of their garage or a small corner
office, mostly in order to keep their initial investment costs down. But what
happens when you outgrow that home office? Moving out into the business world
is a financially frightening proposition. Signing a lease for an office is a
decision that will greatly impact your business…and your bottom line. A good
choice can dramatically improve your success, but a mistake could prove
disastrous.
“You must not take this chore
lightly or rush through the process,” said Charles E. McCabe, founder of
People’s Income Tax Inc. “Information and knowledge are power and, to be on
equal footing with the landlord or, more likely, the landlord’s leasing agent,
you must educate yourself in the rules of the leasing game and obtain as much
information about the property, the landlord and the local market conditions as
possible.”
Although each company’s needs will
be different, whether you are a law firm or a financial advisor, a publishing
venture or a wholesale food manufacturer, there are some basic options to keep
in mind:
Buy land and build your own facility, or buy an existing building.
– These usually aren’t options for a small business owner, unless you have
scads of cash and have a lot of time on your hands. There are many steps to
this process, from site selection and acquisition, plan development and
architectural fees to construction permits, hiring a contractor and buying
furniture. This can also be a very expensive proposition when you add up all
the fees (for assessments, appraisals, loans and contractors) to the down payment
on the building and property taxes. This also puts the business owner into a
second business, that of real estate investing and property management. The
benefits can include fixed costs, tax deductions and additional income (if
extra space is rented out or sold), but the downside includes a lack of
flexibility if your space needs change and huge up-front costs.
“Buying an existing building or an
office condo is a great option for small business owners,” said Jay Klepinger,
vice president at First International Bank in Mesa. “It’s nice because you can
move in immediately and it serves as an investment in your future as you gain
equity in the property. Disadvantages can be that the inside of the building
may not be configured exactly the way you want it.”
Lease or rent a building, or part of a building. – This option
frees up valuable working capital and gives good flexibility in that a business
owner can move to a new space if their space needs change. It also allows you
to focus on your core business, rather than the business of managing a facility
you own. The drawbacks can be variable costs and no equity.
Executive or Flex Suites. – Described by Larry Cohen, executive
vice president of CRESA Partners, a real estate broker dedicated to client
needs, rather than to the landlord, as “the business equivalent of a furnished
apartment,” this option allows the most flexibility to small business.
“Small businesses are making up an
increasingly larger portion of the economy, and the demand for smaller, but still
Class A, office space has skyrocketed,” said Devida Lewis, director of sales
for Free Office, a company dedicated to creating innovative small office
solutions. “However, traditionally prime office space has not been conducive to
businesses in the 500-2,000 sq. ft. market that are looking to efficiently
staff 1-15 people. The setup of traditional office space is usually inefficient
for small businesses, as it forces them to expend capital to obtain the
amenities of larger corporations. Also, it often causes them to settle for
second-class locations that are not representative of their business.”
The executive or flex suites option
gives a small business owner the benefits of having a physical location at
which to do business, get mail delivered or hold conferences and shared costs
for the receptionist(s), fax machine, copier and common areas. Many executive
suites come with furniture and phones, and almost all of them are “plug and
play,” meaning the phone lines, electricity and Internet connections are already
in service, so there is no waiting for Qwest or SRP to come and hook you up.
You can move in and start doing business the same day. Some even offer the
option of having a “virtual” office, in which the business owner does not need
an actual office to work in, but gets a dedicated phone line with a
receptionist to answer it, a place to get mail and use of the conference rooms.
“Our tenants also have access to
over 400 other office locations worldwide to use while traveling, at no extra
cost,” said Christopher Haws, managing partner of Free Office. “Tenants can
focus on running their business and not worry about the logistics and
operational costs of office space management. This is what led to the company’s
tagline: ‘Free to run your business.’”
“Executive suites are not a new
concept,” said Chuck Kohlhase, developer of the Sun Valley Office Park on the
southwest corner of University and Sun Valley Blvd. in Mesa. “Back in 1959 or
so, when I was first getting started here, I shared a desk with Carl Bremer,
who developed the Groves. I had half the desk, he had the other half, and we
had one phone between the two of us.”
H. Trase Barney, Sun Valley’s
project manager, agreed. “It’s a time-tested concept, but with new packaging.
Now, a small business owner can have a physical and/or mailing address at the
executive suites that offers them a place to get mail, hold meetings in the
common area and someone to answer the telephone, giving the appearance of a
larger, more successful company. This is a way in which we can make office
space affordable for everyone.”
The concept is also similar to a
business incubator or small business development center, which also offer
business development services, networking and speaking opportunities and other
on-site support mechanisms, although these are usually only available through
an application process or by being a member of an association. The now-defunct
Arizona Technology Incubator and the newly developed Northern Arizona
Technology and Business Incubator are two such examples, as is the ArizonaSmall Business Association (ASBA), which is opening an incubator-type facility
in Phoenix.
“The concept of executive suites or
a business incubator is good for small businesses because more often than not,
overhead is a main issue,” said Sherry Azzarella, ASBA’s communications and
sales director. “When you have a home-based business wanting to transition, but
not wanting to sign a long-term lease, a business owner who wants to see how it
goes or wants to hold conferences outside of their home to add that extra sense
of professionalism…this is a good way to test the waters.”
Some Local Options
32 Falcon Field. (4710 E. Falcon Drive), 714/444-3510. Located
within the Falcon Field Airport complex, this corporate office building leases
office space for a variety of businesses.
6820 E. Brown Road. Cavan Commercial, 480/860-6900 x 236.
This project features already built-out buildings that are ideal for medical or
family practice doctors. They are move-in ready and only two years old. Sizes
are approximately 3,500 square feet per building.
El Dorado Professional Center. (6328-6360 E. Brown Road), Aminoff& Co., 310/201-9600. These four Spanish-style buildings
were built in 1987 and contain a total of 22,189 square feet split between
medical and general tenant office space.
Falcon Executive Suites
Falcon Executive Suites. (4808 E. McKellips Road), 480/505-1015. Built in 2001, this single building
houses executive suites. Packages range from 129-410 square feet per office,
with digital telephone, auto-attendant, voicemail, high-speed Internet
connections, a receptionist, conference room, a kitchen, break area, outdoor
patio and much more.
Greenfield Professional Village & Falcon Commerce Square.
(Northeast corner of Greenfield & McLellan Roads), UTAZ, 480/776-3500. This site features professional office buildings for sale or
lease on 8.5 acres of land. There will be 10 single-story office buildings
totaling 48,000 square feet in the Greenfield Professional Village segment of
this project. The adjacent Falcon Commerce Square will have another three
buildings totaling 21,400 square feet and includes warehousing capabilities.
Mountain View Plaza. (Northeast corner of Brown & Greenfield
Roads), Glenwood Development Company, 480/775-4650.
Consists of three office buildings interspersed between retail space.
Sun Valley Office Park. (Southwest corner of University & Sun
Valley Blvd.). Kohlhase & Associates, 480/505-7005. The Sun Valley Office Park will feature 112,000
square feet spread throughout 23 buildings. This mix of professional and
medical offices, including two buildings specifically for executive and flex
suites, is set in a lush park-like setting with large trees and greenbelt
areas. Available square footage ranges from 3,100-6,950 per office, and there
will also be a “virtual” office package available.
Thunderbird Executive Plaza. (2550 N. Thunderbird Circle). Located
at Falcon Field Airport across from Anzio Landing Italian Restaurant, this three-story,
Spanish-motif complex features 33,960 square feet of executive office space and
ten aircraft hangars. Additional amenities include taxiway access, a common
lounge area, a pilot lounge, private third-floor balconies, covered first-floor
entries and more.
Val Vista & McKellips Office Building. (Southeast corner of Val
Vista & McKellips Roads), Saager Properties, 480/241-5589.
Not yet built, this is the perfect office site. The 1.4-acre lot is hard-zoned
for an OS-PAD and nearly ready for construction.
The Village at Las Sendas
The Village at Las Sendas. (Northeast corner of Power &
McDowell Roads), Aurbis Development, 480/314-1600 x 103. This 10-acre project
is a mixed-use retail and office project that includes 35,000 square feet of
professional offices, 40,000 square feet of specialty retail and a 14,000
square-foot CVS pharmacy. Tentative tenants to date include Zocalo Spanish
Fusion, The Egg and I, Manny’s Original New York Deli and Restaurant, D-VineWine Bar and Bistro, Trails and Paths Realty, Capital Title Agency, New WestLending and Farmers Insurance.
Zahara at Las Sendas
Zahara at Las Sendas. (Northwest corner of Power & Thomas
Roads), Cavan Commercial, 480/860-6900 x 236. This 49,500
square-foot project is comprised of nine well-designed, freestanding,
single-story office condominiums. The project offers ample parking throughout
and these attractive buildings are well-suited for both medical and office
professional users. Suite sizes range from 1,200-6,000 square feet, and the
project is estimated to be finished in July 2005.
(Originally published in Northeast
Mesa Lifestyle, Vol. 1:2, April 2005.)
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