Alix Stuart’s A Tale of Six Cities is a well-written article about considerations a CFO must make related to real estate and peripheral costs impacted by real estate, like cost of living. In the article, Alix identifies six major cities – 2 on the East Coast, 2 on the West Coast and 2 in the Central US – pairs of which account for three major points on the tenant/landlord power spectrum. Below is a chart that identifies the six cities, linked to their respective reviews, and where they fall in the spectrum. NOTE: This is not to say that Chicago and Austin are necessarily “value cities”, nor that New York and San Francisco are cut-throat, but rather that these classifications are relative to each other.
|Power of Tenant/Landlord||City #1||City #2|
|Stronger Landlord||New York City, NY||San Francisco, CA|
|Moderate||Las Vegas, NV||Charlotte, NC|
|Stronger Tenant||Chicago, IL||Austin, TX|
For any corporation occupying space in one of these markets, Alix’s analysis of each market, paired with real-world examples and statistics, provides some insight into where the market is trending and whether it will continue to remain a financial opportunity… or hazard. One thing that I did find absent from the report, however, is whether the average rent per square foot is net or gross. I would imagine gross, but as we all know, it’s a bad idea to assume.
As a little added bonus, the final page of the article comprises five tips for dealing with rent-hungry landlords. I particularly admire Jeff Klausner’s wily strategy of negotiating an option to buy their single-tenant office building and then flipping the property for a $2 million profit – now that’s unlocking hidden value.
Filed under: Chicago, Commercial Real Estate, Negotiation, Real Estate, Site Selection | Tagged: Alix Stuart, Austin, CFO.com, Charlotte, Chicago, Las Vegas, New York, San Francisco | Leave a comment »