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Jan. 7 2010 - 5:38 pm | 87 views | 0 recommendations | 2 comments

For Silicon Valley entrepreneurs, a glut of office space means room to negotiate

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Image by Revolweb via Flickr

If your dream is to house your company in a snazzy office–and you have the wherewithal–then you’re in luck. The commercial real estate market is imploding and likely to keep on doing so much of this year. What that means is landlords are ready to negotiate–heavily.

The epicenter of this trend may be Silicon Valley.  It’s experiencing the biggest office glut since, well, the last bust.  There was  more than 43 million square feet of vacant space as of  the third quarter, according to Bloomberg.  Commercial property foreclosures are expected to double.  Approximately 21% of  Class A space is going empty.

Since 2007, developers built more than 4 million square feet of speculative office projects. They figured a horde of young companies would want to move from their initial research and development space into bigger digs. That didn’t happen.  There’s one office complex, Moffett Towers in Sunnyvale, that has leased only one of its six buildings. And it’s only partially rented space in that location.

But this could also be one of the silver linings of the downturn. What’s bad for landlords tends to be good for tenants. And landlords are getting squeezed by renters asking for discounts of 10% or more.

So, if you want office space, it’s time to pounce.  Understand that published rates are complete and total fiction. Ask for all the extras you want–free rent, free renovations,  leases of as long or short a duration as you desire, a guarantee that you can keep your rent at the current cheap level for many years.  And, if you want to renegotiate your current lease, do that.

Go for it .


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    It's just in the past few years that I've become interested in not-only-for-profit startups and small businesses. In fact, I can remember a time when I thought the concept of "enlightened capitalism" was simply an oxymoron. Now, I see the possibilities. Plus, it combines my own political bent with my long-time coverage of small business for such places as the New York Times, Business Week, CNNMoney.com, Portfolio.com, Harvardbusinessonline, and Fortune. Otherwise, I live with my son, a soccer fanatic, my husband, a journalist and avid rower, in Pelham, NY. My daughter, a former varsity wrestler, is away at college, studying art. You can see more of my work at www.annefieldonline.com. Or follow me on Twitter@annearfannearf.

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