February 11, 2000

Consider leasing options six months ahead

DENVER — With the booming high-tech economy, the commercial real estate market on the Front Range is in a constant state of change. As a result, developing a lease renewal or a lease extension strategy can be very important to a company’s growth.
“Because the (real estate) market has changed, there is some legwork that needs to be done before getting into a new situation or renewing an existing lease,´ said Tom Grotewold, vice president of corporate services for Coldwell Banker Commercial Real Estate in Denver.
And because many leases are expiring and the market is in flux, it is important for businesses to keep in mind the following strategic points when evaluating their real estate strategies:
* Identify your company’s requirements and options.
“What a company needs to do is determine its strategy and space requirements and make an evaluation to determine whether its existing space will accommodate its future needs,” Grotewold said.
* Discuss your renewal six to 12 months prior to the expiration of your current lease or when your company has a defining moment in its business operation.
“If your company gets a new capital infusion or a significant new contract, the company can use that driver to make a longer term-lease commitment, acquire additional space or retrofit their current space. Let’s say you are a 20-man software company operating on a shoestring. Then a venture capital group pumps in $10 million to your operation. Now you know what you can afford, what kind of space you’ll need for the next couple years,” he said.
“The time element is important because whether you are going to retrofit or move to a different building, the process of finding a new space or retrofitting your current office can take six to 12 months.”
*Evaluate comparable buildings on the market and compare two to four different proposals using lease analysis software. The comparisons generally include: lease rates, tenant improvements, operating expenses, expansion options and parking costs. Lease analysis software can be obtained at no charge through real estate groups such as Coldwell Banker Commercial.
“The software allows businesses to look at their cash flow streams on an equal or net present-value basis and determine which proposal and space fits their needs,´ said Grotewold.
Boulder’s Ecrix Corp., a manufacturer of tape drives, signed a lease in January that more than doubled its space at 55th Street and Central Avenue to include a nearby 29,000-square-foot building. The new facility, formerly a large warehouse, now contains a combination of Ecrix production, personnel and warehousing.
Ecrix controller Julie Church said the new space did not amount to a big jump in cost per square foot, but pointed out that her company had not been in its first building, a 26,000-square-foot facility, long enough to make a meaningful lease cost comparison. Ecrix pays a little less than $16 per square foot for both of its locations.
“There are a number of factors that go into determining (real estate) expenses, but it’s relatively the same cost for our new building,” she said. “I will say that the whole process is very time consuming. It’s like buying a house. You might have to look at 30 generic properties until you find the right one, unless you find a broker who understands what you want, and then it becomes a much easier process to find that space. A good broker can quickly pare it down to just a few appropriate options.”
Church said her company was more interested in finding a space that was easily accessible for its employees, who commute from as far away as Lyons and Loveland, and was simply “a nice place to work.” She said there were determining factors that were not easily quantifiable, but that Ecrix did start its search approximately six months before its first lease was set to expire.
“We considered things like aesthetics and how the location would impact our employees. We contemplated moving to Interlocken, but decided to stay in Boulder. It wasn’t so much a question of having enough space as it was having a certain quality of space.”
Ecrix preserved the style of its first building in the remodeling of its new facility.

DENVER — With the booming high-tech economy, the commercial real estate market on the Front Range is in a constant state of change. As a result, developing a lease renewal or a lease extension strategy can be very important to a company’s growth.
“Because the (real estate) market has changed, there is some legwork that needs to be done before getting into a new situation or renewing an existing lease,´ said Tom Grotewold, vice president of corporate services for Coldwell Banker Commercial Real Estate in Denver.
And because many leases are expiring and the market is in flux, it…

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