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We surveyed 2,500 Economic Development Officers and members of local Chambers of Commerce. We wanted to find out more about their role in helping businesses with their commercial real estate strategy and providing expert commercial leasing advice.
One theory was proven correct ? these folks are the greatest people in the world. While most surveys only have a 1% response rate, our response rate was 15% (375 participants)! And we are talking about a cold email and with no bribes (sorry EDOs)!
We asked 5 simple questions and the results were interesting?
This was probably not a surprising result. The distribution follows a normal bell curve. There are about an equal amount of EDOs that think tenants are above average as below average.
However the definition of average in this case is only a 5 out of 10. Businesses - you need to step up your game! This should probably be expected since most businesses only look for commercial space or re-negotiate their existing lease every 5 or 10 years or so.
This was our favorite question as it was open ended and allowed us to filter the responses by category. The dominant categories were space vs. the lease. In other words, did EDOs tend to value finding commercial space or did they focus on negotiating the lease once the space is found?
By a ratio of 2:1, our survey takers thought that negotiating the lease is where businesses could improve upon more than finding the space.
It could be that finding space is perceived to be an easier task with the internet, driving by properties, using brokers and Economic Development offices. They likely see more problems when tenants sign leases that they simply do not understand.
Of the respondents who thought the lease was more important than the space, also by a ratio of 2:1, those folks thought also that the other terms and conditions found in leases were more important than the rent.
Here is a sample of the specific responses about what those other terms are:
1. CAM fees
2. Negotiating leasehold improvements
3. Understanding different kinds of leases
4. Factoring in renovation costs
5. Utilizing incentives
6. Understanding terms real estate brokers use
7. Clarifying landlord vs tenant responsibilities prior to signing
8. Costs beyond lease rate
9. Timeline, steps to occupancy
10. Understanding nuances of leases
11. Understanding HVAC
12. Knowing square footage gross up factors
13. Rights to renew
14. Rights to expand
15. Lease cancellation rights
16. Flexibility to sublet
There were a number of responses that highlighted hiring a partner at the beginning of the process. By a margin of 3:1, those responses suggested a broker compared to suggesting an Economic Development Officer.
There was considerable overlap in this answer. Below is a summary of the most compelling answers we received.
1. We know the type of product that is available in our community. So, we are able to point companies that are looking to expand or relocate towards the right part of the city and connect them with the right type of broker that can best meet their needs.
2. We have a non-financial interest in their choice. It is always for their benefit.
3. Objective source of comprehensive listings & opportunities; awareness of incentives that could be offered to locate in particular places.
4. Show them all the options in our community; ask them questions so that they don't select a location at which they cannot operate their business.
5. Informing businesses about real estate opportunities they may not know about.
6. Helping them understand the bigger picture of different projects that are going on around them.
7. Conduct commercial real estate searches on behalf of companies looking for new space. In addition, we maintain a network of brokers that we occasionally will email with an "out of the ordinary" need. We can provide location demographics, workforce, and other data to aid in location decisions.
8. Identifying and vetting space on behalf of local businesses.
9. Working with them to have them help inform or be informed of trends.
10. One stop shop for retail, commercial and industrial space needs.
11. Knowledgeable, off market products, unbiased, no commission, availability of incentives, resource in the middle so they can focus on their business.
12. Have good up to date data on zoning, use, assessed value, etc.
13. Visionary planning and goal setting and does their space accommodate the future plans.
14. Offer topics to discuss with lessor prior to lease negotiations.
15. By providing information about our community including traffic counts, roadway plans, developments in the pipeline and more.
16. We serve as a concierge from start to finish in ensuring they're connected with the right team to navigate the process and all decisions.
17. Taking a comprehensive approach that aligns real estate, workforce, investment and operating costs, and transportation needs all together.
18. We show all properties that are available as opposed to a broker that might show only his firm's listings.
19. Intimate knowledge of the community and its direction.
20. We get involved in the tire kicking stage when they don't want to be sold. They are just testing the market before they leap into growth. We also help them understand the pros and cons of each local unit of government and utility partner before they settle on an area.
21. A lot of the time we work with small businesses that realtors refuse to work with.
22. Helping with site searches - often EDOs know about spaces or sites that aren't listed but are available. We are also more impartial than commercial brokers because our main concern is ensuring a business is best matched with a space that meets their needs as opposed to collecting a commission.
23. Offer workshops on leasing.
24. Our office partners closely with our local commercial real estate agents. We do not try to duplicate their efforts, but rather fill in the knowledge gaps and provide additional information. For example, we are often aware of properties that are not currently on the market, but that have an owner willing to consider a sale. We also can help bring additional resources (sometimes technical, sometimes financial) to help make a deal work for all parties.
1. We wish we knew of all companies looking to relocate or expand as early as possible so that we could add value and help them through the process.
2. E-mail addresses of commercial tenants in our county so we can keep them updated on resources.
3. Help them understand resources available from EDO.
4. A good primer on commercial leasing that explains things.
5. More information on asking lease rates. Many brokers withhold that information.
6. More communication on what is available.
7. A larger budget to afford access to resources like Costar, and other data tools.
8. Better connection to brokers who would refer potential clients to us for assistance and guidance.
9. An easy way to compare where available properties are in comparison to the city's zoning map.
10. Access to Commercial Real Estate database.
11. Pricing on spaces that we could count on from all spaces versus calling every time.
12. Support from area Real Estate Agents.
13. Better, faster knowledge of what properties are available and lease rate averages in different parts of the city to inform commercial tenants, property owners, and brokers of market price demand.
14. More contact information from commercial brokers.
15. I wish we could afford a Costar license.
16. A city registry for businesses.
17. Additional incentives to assist our businesses would always be appreciated. Presently, the majority of incentives available are tied to job creation and with the automated processes of most industrial businesses, job creation is not as great as it used to be; however, productivity and bottom line are increased significantly.
18. We need to be more involved in the process and when commercial realtors are making deals with businesses in our area, without including us, the business can miss out on the resources, free money and expertise our EDO has.
19. A lot of real estate agents are not that easy to communicate with. I will find they don't know about city zoning and just want to fill spaces, which I understand, but real estate agents are also a big part of building a community.
20. Lease/rental/tax rates of surrounding communities with similar real estate inventory.
21. Access to more commercial real estate agents.
22. Better information - some brokers aren't thorough when listing a property and only provide limited information.
23. It is always a challenge to ensure that our office has up to date listings and brochures for all available properties in our community. Many realtors bring us this information but some do not. We also have trouble maintaining our current properties list because we are not told when a space is filled, or when rates or other terms are changed.
24. One central database that includes all available commercial space with pertinent information like square footage, lease fees, and basic lease terms.
25. Greater awareness of our organization and the services we provide.
26. Better contacts with commercial real estate firms.
27. I wish we ED's were approached on the front end of projects.
28. Notification of when a space is leased; type of business, number of employees.
29. More realtors to list their buildings on our website.
30. More information about the leases on the market, the terms and requirements.
31. An affordable database of properties so that we don't have to develop our own. This mainly applies to smaller communities.
32. A better program for start-up businesses.
Hopefully you enjoyed this article and it brought you value. If you know local small businesses that could benefit from this blog post, please share on your favorite social media platform - our share button is just a little further down the page!
Once again, many thanks to our participants, with a special thanks to:
Meredith Harris, Marlborough, MA
Bethany Dentler, Medina, Ohio
John Henry King, Bowie Maryland
Vince Giovannini, Gilbert, AZ
Jason Kester, Portsmouth, OH
Kim Marshall, City of Fremont, CA
James Sauls, City of Raleigh, North Carolina
Josh Birks, City of Fort Collins
Dan Bates, Hamilton, Ohio
Matthew A. Thomas, City of Canton, GA
Cleese Relihan, City of Burlingame, California
David A. Leezer, St. Charles, MO
James Grunke, Missoula MT
Toby Bennington, Anniston, AL
Lisa James, Columbus, Mississippi
Jennifer Anderson, Flowood, MS
LInda Ory, Port Gibson,
Ashley Hardin, Leavenworth County, Kansas
Bill Rodier, St. Landry Parish
Michael A. Davis, Jackson, Mississippi
Chris Castle - Norwalk, OH
Steve Stroud, Roswell, Georgia
D'arcy Main-Boyington, City of Brewer, Maine
Steve Magoon, Watertown, MA
Robert Mandley, Hagerstown, Maryland
Teresa Brydon, Largo, Florida
William P. Murphy, Greater Columbus Georgia
Lee Lawson, Fairhope Alabama
Neil Marciniak, City of Centennial, Colorado
Jeff Allred, San Gabriel Valley, CA
Tana Trichel, Monroe, Louisiana
Bobby Davis, Payson, AZ
Dick Hinson, Aurora, CO
Jennifer Feist, Valley City-Barnes County
Dave Gammon, Charlotte County, FL
Andy Haussler, Clovis, CA
Brittany Deal, Lafayette, LA
Jeff Rouzie City of Foley, AL
Jenni Graff, Missoula MT
Denise Stephens, Littleton, CO
Steve Art, Wheat Ridge
Rina Bakalar, Trumbull, CT
Temple Carter, Smyrna, DE
Jerry Mayes, Deltona, FL