Gallaway Commercial, Inc. is one of the SVALA’s Platinum Business Partners and many of our firms have used them during lease negotiations or relocation. Russel Gallaway, President of Gallaway Commercial, and Brian Kuklish, Vice-President of Project Management, not only sponsor SVALA but attend our luncheons and other special events as well.
I had the pleasure of sitting with Russel at the recent Workplace Update breakfast and our table had a fun discussion about kids, sports and how parents manage to be in three places at once! It is no surprise to me that Russel can pull that off yet still manage to run a successful business and keep his customers happy.
And, boy, are his customers happy! Just read these reviews!
Kellie B. Narayan, Executive Director of Wilke Fleury says, “Russel has helped negotiate and renegotiate Wilke Fleury’s leases for years and is an excellent resource and professional. The project management assistance Brian Kuklish provides is excellent and invaluable. Brian is patient, has a great sense of humor, is results oriented and committed to the highest quality result for any project on which he works. I have worked on Bay Area office relocations, a shell-to-finish build-out at the Ferry Building, and remodels of large commercial spaces, etc., and Russel and Brian are the Best!!”
Another Administrator, Joan Gabrielson of Cook Brown, just recently moved her firm and says, “Russel and Brian did a fabulous job listening to what our partners wanted then finding and moving us into our new space. They worked with us through the leasing process as well as worked with TI contractors, furniture and equipment vendors and the landlord – all the while communicating and working with the partners and myself. Their “nuts and bolts” approach of assisting with the entire move process was invaluable.”
Relocating or renewing a lease can be one of the most stressful projects of a legal administrator’s career. To help all of us at SVALA, Russel Gallaway took time out of his busy schedule to share a few tips.
Thank you, Russel, for this terrific information and for your sponsorship! (Be sure to also read their Business Partner Spotlight here.)
TOP 10 THINGS TO ASSESS WHEN RENEWING YOUR LEASE OR RELOCATING
The second largest expense for law firms is the cost of their office space. Having a team of experts to represent you to minimize these costs is critical to protecting your bottom line. Here are 10 of the biggest issues to consider the next time you are dealing with your lease.
- Personal Guarantee. Is the landlord requiring a personal guarantee? Is it joint and several? There are multiple ways to decrease or eliminate personal liability.
- Expansion. Is the need to expand important? Do you have a hard option, first right of refusal, or first right of offer on contiguous space? Are the terms clearly delineated in the lease? This language can be very complicated and lengthy but is critical to be done right for a growing firm.
- Tenant Improvements. Is your deal turnkey or are you working on an allowance? How is the general contractor selected? Is the landlord charging a supervision fee? Who is paying for ADA/Title 24 upgrades that are triggered by the T.I.? It’s possible to quantify these potential costs and typically have the landlord shoulder these costs.
- Square Footage. How is your space measured? Is it gross square footage, useable square footage or rentable square footage? Firms often focus on $/SF, but you could be paying for a patio and don’t even know it. Verifying what you are paying for prior to signing a long term lease is just good business.
- Relocation. Does your landlord have the right to relocate you at their option? If so, what are the terms they can do this on? Ideally, this provision is struck from a lease. If the landlord will not agree to strike it, it can be scaled back drastically to make sure you get great space if the landlord exercises their right and you are compensated for the burden of relocation.
- Operating Expenses. Most law firm leases come with very expensive Tenant Improvements so the lease term is 7 to 10 years. Making sure your base year is grossed up properly, having reasonable operating expense exclusions, and having reasonable audit rights will ensure a landlord does not gouge you over the term of your lease.
- Exclusive Use. You probably don’t want your biggest competitor to put their name on your building or have a more prominent entrance to their space. You can typically prevent this from happening if you negotiate it into a lease.
- Relocation Costs. The costs to relocate your office are significant and should be quantified to make a sound financial comparison. A solid project manager should make sure that you are working through COB on Friday and you are up on Monday. Even if you only have ten attorneys, a day of lost productivity at $450/hour is $36,000.00.
- Delivery Delays. If you choose to relocate, what happens when your new landlord delivers your space late or doesn’t deliver your space? Making sure this is quantified and the burden is put on your new landlord protects your bottom line. In the event your new landlord continues to make excuses and doesn’t deliver your premises substantially complete, having the ability to terminate your lease is important.
- Property Taxes. Most law firm leases are full service gross which means operating expenses are included in the “base year” or the first year of the lease. However, landlords are still getting drastic reductions in their property taxes through Proposition 8 appeals. If you don’t have rights protecting you against this, you can potentially have significant property tax bills passed through to you for the term of the lease.
The above is by no means everything you need to consider when negotiating your next lease but these are good talking points to protect your firm and make it more profitable.
About Gallaway Commercial, Inc.
Gallaway Commercial, Inc., GCI, is an industry-leading commercial real estate company that exclusively represents business owners and specializes in representing law firms. GCI represents 30% of the Top 40 firms in Sacramento that lease space which is more than double their biggest competitor. The company only represents tenants and buyers – never landlords – which eliminates potential conflicts of interest that other real estate firms have. In addition to tenant and buyer representation, the firm also offers in-house construction management and project management services. Gallaway Commercial, Inc. is based in Sacramento, but represents clients’ needs across the United States.
Russel Gallaway is the President and owner of Gallaway Commercial, Inc. and can be reached at 916.801.8878 or email@example.com.