Beware the Fright of Hidden Occupancy Costs

REAL ESTATE
Beware the Fright of Hidden Occupancy Costs
When you sign a commercial real estate lease, you commit to paying rent and, potentially, common area maintenance (CAM) fees. But other expenses may be embedded in the fine print of the lease contract, and sometimes essential services are excluded entirely from the rental agreement.

Such costs are often unpredictable, and they may vary dramatically from one year to the next. If you are not aware of these hidden occupancy costs, you could be in for a big (and expensive) surprise.

These so-called “hidden occupancy costs” include:

Variable CAMs: CAM fees vary depending on the lease. Things like trash pickup, landscaping, snow removal, and parking lot maintenance are generally included, but the amount charged for such services differs depending on how the lease is structured. It’s important for you to understand how the CAM fees are calculated and assessed.

Dead space: Occupancy costs such as rent and CAMs are usually assessed on a per-square-foot basis. However, not every square foot of office, retail, industrial, or even warehouse space is equally valuable. Depending on the shape and configuration of the space, its visibility, possible obstructions, and various other factors, you could find that a portion of your footprint is less desirable or even virtually unusable. In other words, if you lease a 3,300-square-foot area, but only 3,000 square feet are usable, you may be overpaying by 10 percent.

The building’s load factor: In most buildings, the occupancy cost includes not only the footprint your business occupies but also a proportional share of common areas such as hallways and lobbies, restrooms, grounds, and amenity areas. If your building has a 20 percent load, you are essentially paying for 25 additional square feet for every 1,000 square feet you lease.

Property insurance, taxes, and general liability insurance: Tenants are responsible for paying a percentage of these expenses, again based upon the square footage the business occupies relative to the overall square footage of the building.

Security services, cleaning costs, and utilities: These expenses can sometimes cause “sticker shock,” as can the cost for repairs, modifications, or upgrades that you may need in order to make your space usable. In some cases, even basic utilities like water, electricity, and sewage are not included in a monthly lease and must be added to the total occupancy cost. Internet, cable, and phone service are usually not included even when other utilities are.

Other building charges: Read the terms of your lease carefully so you don’t miss any other fees that you might not expect. Administrative fees, special assessments, signage fees, parking fees, after-hours HVAC fees, markups on maintenance services, and even requirements that you use an in-house caterer can really add up.

Incidentals not covered by the lease: You will likely be responsible for covering certain other expenses related to your business premises, including pest control services, plant services, and furniture or equipment rentals. Be sure to allow for routine maintenance and unexpected repairs when calculating your total cost of occupancy.

For assistance with this process, please contact my office. I’d be happy to help you find any hidden costs in your potential investments.


HOT BIZ TRENDS
Have You Tapped into Texting to Engage Customers?

Texting, also called SMS, is a simple yet effective way to engage customers and prospects.

Texting’s brevity, instant delivery, and prominent position on a consumer’s mobile phone make your message stand out, even if only for a few moments. And unlike with an email that may end up in a spam folder, people are generally motivated to read text messages. Adobe reports the open rate for text messages is up to 98 percent, versus about 20 percent for email.

Text messages not only reach customers, but they drive engagement with them. Many buyers consult their phones when making purchases, and their purchase behavior is often influenced by the product and pricing information, coupons, and other relevant information made available to them in the moment.

SMS allows you to communicate with customers on a personal level. You can send a reminder about an upcoming appointment or thank them after a visit.

Texting is also an effective way to publicize new products and/or services, promotions, event notifications, flash sales, and special offers.

Your text messaging strategy should complement your other marketing efforts. When you sign up for text messaging services, you will be assigned a dedicated 10-digit number (long code), and customers must give you permission or “opt in” by sending a keyword to your long code.

Integrate your efforts by publishing your long code on your website, in emails, on social media, and on promotional materials like vehicle signage and flyers. Use these opportunities to encourage customers to opt in to receive your texts.

Once they’ve opted in, make customers happy they did so. Offer convenient interactions and relevant content via text that add value to your services.


CUSTOMER SERVICE
Mastering the Accessibility of Social Media

Social media is a great way to connect with current consumers and reach potential new ones. But social media can be a double-edged sword, too, as customer complaints and poor reviews can gain traction and spread quickly online.

How can you successfully incorporate social media into your business operations? Here are some tips.

Respond quickly to both messages and reviews. If it’s a negative review or a complaint, do what you can to address the matter ASAP. If it’s a question, give a prompt response, even if just to say, “I’ll get back to you soon with a specific answer.”

Respond to feedback and reviews respectfully. No matter how rude or unfair a customer may be, remain courteous and professional. Don’t argue with the person, as this will only generate more negative comments. Try to use the opportunity to understand the issue, fix the problem, and improve your reputation.

Start a Facebook group and build an online community around your brand. Invite members to share opinions, ask questions, and communicate about your products and services.

Use chatbots. Increasingly, people reach out to businesses using Facebook Messenger, and you can respond using Messenger’s chatbots. By setting up Q&A triggers, you can have the bot answer FAQs about location, hours, and service offerings. For more complex queries, a live operator can take over at any time. When you create scripts for your chatbots, make them as friendly and human-like as possible so the bot reflects positively on your business. Leverage this technology to save time and make service more convenient for you and your customers.


REAL ESTATE
Avoid Parking Pitfalls with Commercial Properties
Location matters in all aspects of real estate, including parking. Whether owning or leasing property, you need enough parking for your customers and employees.

With this in mind, consider the following aspects of this important property feature as you weigh potential options.

Parking ratio: Determine the building’s parking ratio. This is found by dividing the number of available parking spaces by the amount of leasable property. These ratios are usually written as number of spaces per 1,000 square feet.

Lease terms: If you’re a tenant, negotiate parking into leases. Parking is only guaranteed if it’s in writing. Be sure to specify who is responsible for maintaining the parking spaces.

Parking laws: Check municipal parking bylaws and ensure the property has the required number of handicapped parking spots to fulfill accessibility requirements.

Customer experience: Good parking can help enhance the customer experience. Look for ample space, since adding parking later can be difficult and expensive. Make sure parking is easily visible and accessible near the entrance. Watch for any issues those with mobility concerns may encounter. If parking is shared with other businesses, spaces that are designated “customer parking” can be extremely beneficial.

Employee experience: Staff need good parking too. Affordable and convenient parking can help attract and retain workers. Decide how much you’re willing to pay for employee parking and be sure to include this in your cost estimates.

SA Realty Watch Group
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Worth Reading
Transitioning from Solopreneur to a Team Leader
By John Rampton
Entrepreneur.com

Businesses may begin with an individual, but teams make them grow. Not all founders make good team leaders, though. This article summarizes what you need to know to move from working alone to leading a team. Understand the company’s purpose and build your team around it. You no longer need to fill every role, so be intentional about who you hire and how you develop their skills.

Getting It Right: 10 NY Entrepreneurs Share Their Best Hiring Tips
By Forbes New York Business Council

Forbes.com

It matters who you hire, so it matters how you hire. Here, 10 different business owners give their advice about how to hire properly. Their insights range from what skills and qualities to look for in candidates and the type of questions to ask during an interview to how to help new employees after hiring. This article also broaches the subject of who should be involved in the hiring process.

Learn the Ins and Outs of Video Marketing with These Expert Tips
By Annie Pilon

Small Business Trends

If video marketing intimidates you, or you want to see how your current efforts compare to best practices, check out this post. It links to information about aspects of video marketing, including SEO use, ensuring audience retention, and upgrading content.


LINKS YOU CAN USE
This Month-Prospecting
Prospect simply means “to search for.” But what do you do with customers once you find them? Nurturing those leads is essential to turn prospects into sales and cultivate lifelong customers. Use the following links to sharpen your skills.

What prospecting techniques lead to well-nurtured customers? Try these:
9 Effective Sales Prospecting Techniques You Should Be Using

Cold calls are tough. Learn 25 ways to encourage a prospect to have that initial conversation with you:
25 Time-Tested Ways to Schedule a Call With a Business Prospect

Where should you invest your time prospecting? Here’s how to qualify potential leads to invest time strategically:
A Dirt-Simple System for Qualifying Sales Prospects

What forms of prospecting have you tried? Are you tapping into the most effective email initiatives? Here’s a helpful overview of automated emails:
How to Nurture Your Prospects Toward The Sale

A host of tools are available to help small business owners nurture prospects in today’s market. Try this library of resources:
37 of the Best Sales Prospecting Tools for 2019

This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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