Re broker-5e

1. Unit 5: Selecting a Facility

2.  Factors in Selecting a Facility
• What are the Expectations of Your Target Market?
o Your target market should be the primary consideration because the type
you choose may affect your competitiveness.
o Three ways to configure your business are as a traditional (bricks and
mortar) office, a virtual office, or a bricks and clicks office.
 Traditional Office- Assigned Workspace. Traditional bricks and mortar office that
provides facilities for all of the company’s personnel.
 Traditional Office- Unassigned Workspace. Smaller physical office with a private
enclosed office for the broker-owner and an area for administrative and reception
functions.
 Bricks and Clicks Office. This is a small office with a private office for the broker-
owner and an area for administrative and reception functions.
 Executive Suites are shared offices with services provided by a management firm.
 Virtual Office Building. This is an offshoot of the executive suite. The company does
not rent a dedicated, full-time office in the business center. Instead, for a small
monthly fee ($75-$300), the company has a business address, directory listing,
phone reception, and receipt of incoming mail.
 100% Virtual Office. Aside from individual home offices, there is no physical office in
a virtual company.

3.  Factors in Selecting a Facility (continued)
• What is your Budget?
o Your primary limiting factor is going to be money.
o You should budget a specific amount for your physical
or virtual office and stay within that budget.

4.  Factors in Selecting a Facility (continued)
• Can the Property Support the Current Technology?
o Business today is driven by technology, and the real estate brokerage
industry is no exception.
o Adequate Electrical Power
 Unless recently renovated, older buildings do not have adequate electrical
wiring to support the electricity needs of a modern business.
o Telephone and/or Communication Systems
 If you are planning for a physical site, be sure the building can support
the phone system you need for your business.
o High-Speed Internet Access
 There are different ways to connect to the Internet—dial-up, DSL, cable,
satellite, and wireless.
 The dial-up connection is the slowest and not functional for business.
 Both DSL and cable offer high-speed wired access.
 Satellite Internet service is usually slower than DSL or cable, but is used in
areas where cable and DSL connections are either unavailable or
unreliable.

5.  Virtual Office vs. Traditional Office

6.  Physical Office
• Commercial Property
o Retail property is property used for retailing, which is
the sale of consumer goods and services from a fixed
location, such as a store or shop.
o An office building is a building divided into individual
office spaces where professional or clerical services are
performed.

7.  Physical Office (continued)
• Commercial Property
o Classifying Retail Centers
 Market trade area refers to the geographic area from
which a retail center draws its customers.
 The size of a center is based on the gross leasable area
(GLA), which usually is quoted in square feet (SF).
 Measuring Floor Area in Retail Buildings
• The usable area is the actual occupied space by the tenant.

8.  Physical Office (continued)
• Commercial Property
o Classifying Office Buildings
 Class A is the highest quality office building available for
lease.
• Class A indicates top-quality construction using high-
grade materials with high-end exterior and interior
amenities.
 Class B buildings are usually older than Class A, but have
been renovated to meet current business requirements.
 Class C buildings have sub-optimal office space and are
located in less-desirable areas.

9.  Physical Office (continued)
• Commercial Property
o Classifying Office Buildings
 Measuring Floor Area in Office Buildings
• The gross area is the total building square footage,
including elevator shafts, vertical penetrations, equipment
areas, ductwork shafts, and stairwells.
• The rentable area is the total square footage for which a
tenant is charged rent.
• The usable area of the building is the actual occupied space
by the tenant.

10.  Physical Office (continued)
• Lease or Purchase?
o There are a number of issues to weigh when
considering a lease versus a purchase.
 Cash Flow. Conservation of cash is especially important in
a start-up operation. In the case of a lease, your initial
cash outlay may be limited to a security deposit and first
and last month’s rent.
 Maintenance. Ownership places all of the maintenance
costs of the building on the company.
 Mobility. A lease gives you the mobility that would be
more difficult with a purchase.
 Budgeting Costs. In addition to known upfront costs, a
lease also enables you to project your fixed overhead
costs over the term of the lease.

11.  Physical Office (continued)
• The Leasing Process
o Discovery Phase: key to getting the best deal on the
right location is to know your needs and wants from
the beginning
 What Image is Projected to Your Target Market?
• Good curb appeal is as important for the image of your
business as it is when you are marketing a home.
• Prepare a cost/benefit analysis to determine if your location
adds to the profitability of the business.
 Determine Acceptable Amenities
• Know what amenities you need and want in your office.
• Prepare a list of questions to ask about each location.

12.  Physical Office (continued)
• The Leasing Process
o Discovery Phase
 Determine Space Requirements
• Typical space needs: broker-owner private office, bathroom(s), file and
records area, storage, computer server, equipment area, break room
• A quick calculation for total square footage needed for an office is the
number of people working in the office full-time multiplied by 75-150
square feet.
• Popular sizes for cubicles are 6’ by 9’ (54 SF) for sales associates and 9’ by
12’ (108 SF) for sales managers. Private offices range from 9’ by 10’ (90 SF)
to 20’ by 15’ (300 SF).
• A server is a powerful computer that can store and handle requests for data,
email, file transfers, and other network services from other computers.
• A local area network (LAN) system allows the various computers in the office
to share data and communicate with each other.
• Other areas are file and storage areas, break rooms, restrooms, and
hallways. The space for these areas varies greatly, but as a rule, you should
allow 7 SF per filing cabinet and 15 SF per person for break rooms.
• An office layout is a diagram, usually drawn to scale, of a room or office. It
shows the permanent walls and placement of cubicles, furnishings, and
equipment.

13.  Physical Office (continued)
• The Leasing Process
o Discovery Phase
 Determine Acceptable Locations
• Pay attention to surrounding companies that may
complement your business, such as accounting, insurance,
and law offices.
 Create a List of Acceptable Properties
• Follow your budget and save time by only shopping within
your limits.
• Thoroughly evaluate every location and narrow your list to
your top candidates meeting your minimum requirements.
• Refine the qualifications of the properties you have selected
and qualify the potential landlord(s).

14.  Physical Office (continued)
• The Leasing Process
o Negotiation Phase
 Negotiation is bargaining with the landlord or the leasing
agent about the terms of the lease.
 Often landlords will give you a free rental period, called
rent abatement, for the time it takes you to set up your
business.
 Landlords may contribute financially to the cost of the
tenant improvements needed to modify the space to fit
your needs. This is a build out allowance.

15.  Physical Office (continued)
• The Leasing Process
o Occupancy Phase
 Planning, Permitting, and Build-Out, if Necessary. Before
you can occupy the space, the premises may need some
improvements or alterations to make it appropriate for
your business needs.
 Prepare for Occupancy. Although this step is listed last,
an occupancy plan is something that you should have
been working on along the way.
 Move-In and Grand Opening. These have been combined,
but without a doubt, you will separate them on your
timeline.

16.  Physical Office (continued)
• Leasing Timeline
o Determine your needs = 2 to 3 days to 2 weeks
o Conduct the search = 1 to 4 weeks
o Visit the locations to narrow the choices = 1 to 4weeks
o Lease the property = 2 to 4 weeks
o Modify the space = 4 to 5 weeks for simple
construction modifications or 6 to 12 weeks for major
reconstruction