July 17, 2018 - Episode 4

How To Find Office Space in St Pete with Peter Fischbach

Finding a great location for your office or storefront can make or break your business. On top of that, commercial real estate is a tricky topic. Our longtime tenant representative and licensed real estate broker, Peter Fischbach, will join us to give us the lowdown on all the tips and tricks that landlords don’t want you to know.

Episode Transcript

Jake Braun:
Hello, everyone. Welcome to Kickin' It with Kapok, a podcast about business owners' marketing struggles and solutions and other business-related topics. This is episode four, "How To Find Office Space in St. Pete with Peter Fischbach." Today, we'll be joined by Peter Fischbach of Fischbach Commercial. Peter is a licensed real estate broker and certified general contractor with over 40 years experience in commercial real estate, in both Louisiana and Florida. He is the preeminent expert in tenant representation in the Tampa Bay area, and as our long time tenant rep, I can personally attest to his unparalleled understanding of real estate in St. Pete. With that being said, let's dive right in. Or did I miss anything, Mirela?
Mirela Setkic:
I don't know. You said a lot of good things about Peter, and I think all of them are true. I came in this morning and I was thinking about how long have we known Peter? I thought it was maybe five years, and then I went into my email inbox and I searched by his last name so I could find the oldest email that I have from Peter, and it was actually February 16th, 2010. We have known Peter for eight years, or more than eight years, which is really, really crazy. He has been a huge help in our journey to find office space over the years. He has taught us a lot about the local office space that's available, landlords, buildings, and leases. Peter is just this huge treasure chest of knowledge when it comes to office space and finding that office space for businesses in this area. Is there anything that we didn't mention, Peter, and that you would like to add about yourself?
Peter Fischbach:
No. You guys, always have been a pleasure to work with. It's always difficult to define what I do, because there's not a lot of me in the marketplace. Commercial real estate is way more complicated than it looks, especially to people that aren't in the business themselves. What I pride myself in doing is just bringing across a lot of information to my clients.
Commercial real estate really is two parts. There's a buyer and a seller. In commercial real estate, the seller is usually a professional. Years of experience, tons of money. They kind of use tricky tactics to fool the public. What I do is make some of the trickier parts clearer. That's not always the easiest thing in the world. Through my journeys within this business, I guess mostly I've been representing small firms. All the way from one people to maybe 20 people, at the most. They seem to have the biggest problem with making a commitment to a new opportunity. Their business is changed. Lawyers, for instance, don't have secretaries anymore. Sometimes, there are huge changes in businesses.
Given that I've done this for a very, very long time. I've seen a lot of different kind of tenancies, I can usually see in advance that my client needs some help in reorganizing their office needs or warehouse needs. That's changed dramatically, too, over the years. We don't have the huge warehouses anymore. We do small, close to town, to resupply businesses with the product about 30 seconds before they need the product.
I'm pretty much up-to-date, and I deal in a lot of different ... with a lot of different kinds of businesses. I try to bring my experience to my clients.
Jake Braun:
All right, Peter, do you feel like people even know what tenant representation is? I feel like when we first got started with you, we didn't even really understand the concept, or thought it was some sort of scam or joke? Or I don't know, Mirela, do you have that email that we?
Mirela Setkic:
That's very true. I remember in 2010, I guess it was, Jake and I were working at another company locally here. We were at a point where we needed to get a bigger office, and get maybe a better office. I went to Google, and like okay, I need to find office space for the owner of the company to look at. I think I came across your website, and I thought that you were maybe a landlord, or that you represented local buildings that have office space. I think I sent you an email. I said, "Hey, we're looking for office space. Do you have anything available?" Then I got an email from you that said, and I think I have it here. You said, "Mirela, you're trying to do something that I can do better." Then you went on to tell me how you represent the tenants, like myself at the time, and how you do all these things and it doesn't cost us anything. I said, oh my God. This guy's a charlatan. This doesn't make any sense. There's no such thing as free lunch.
Jake Braun:
How do we get service for free? It doesn't make any sense.
Mirela Setkic:
Yeah, exactly. I said whatever, I'll take a chance. Then you showed up with, I think it was like a manila folder under your arm. You're like, "Here, I have all these office spaces for you guys. Whenever you're ready, we can go see them." We definitely thought it was too good to be true.
Peter Fischbach:
Tenant representation. It is unbelievably stupid. I don't know who came up with that. There's really no other way to describe what I do. I only represent tenants. I have no listings. I don't have any allegiance. All I have is just a tremendous amount of information about all the local landlords.
The local landlord hires an agent, and I share that agent's commission. Now sometimes, I deal direct with the landlord, and he pays the same amount of money. Not a tremendous amount, 3 - 4% is my usual.
The concept is just tough. People understand it when they go house shopping that there's a buyers agent and a selling agent, but somehow it doesn't translate that well to commercial real estate. It's basically the same thing.
The commission, probably, should be paid by the buyer, or the office looker, or the company, but it's already there. It's just a little bit more complicated. It seems like it's a conflict, but it's not. The landlord's happy for me to bring clients, and my understanding of how his language and what he does and how he does it, and the way he likes to do business. It just makes it easier for that landlord, landlord's agent, to make a deal, because I've been there before. We just understand each other, and we can get to the point quicker.
Mirela Setkic:
Yes. One of the other things that we didn't really understand at the time that we met you is that in addition to finding us office space, you actually helped us understand the lease agreement. Actually, you were the first person who made us realize that things in there are negotiable. We had no idea. Up until that point, my only experience with lease agreements have been with my apartment lease. I never thought that I could renegotiate anything with my apartment landlord. When looking for office space, I just assumed that it was the same situation. You were the first person who actually told us that that's not the case.
Peter Fischbach:
I think you're not unusual. I dealt with restaurants for a little while, and every client I ever picked up restaurant-wise, I asked for their old lease. They had no idea where it was. They had never negotiated the first thing. They had no idea what was in it. I don't let my clients, the people I work with, do it that way.
The lease is just an agreement of business terms. It may have a little teeny bit of legal in it, and really most time none. It's just landlord agrees to do something, the tenant agrees to do something. That agreement, which up to the lease was a handshake or verbal or whatever, just I make sure it's in writing and that everybody understands it.
I can't tell you how many times I've got a call, "the air conditioning is out." And I said, "Well, did you look at your lease to see whether the landlord fixes it or you fix it?" "I didn't think to look in the lease." That kind of point, and how it impacts the rent, is my job.
Mirela Setkic:
That's true. Maintenance of the building, what happens when the AC goes out, and things like that. One of the buildings that we were in, noise problems. I think some of the lease agreements have something in there that says the landlord can make noise at this time of the day. Or other tenants can make noise at this time of the day. If you don't really look at those terms, then when that time comes then the landlord is making noise, then you don't really know what your rights are in the building. And you can speak more on that.
I think some noise is reasonable. Some is not reasonable. Whatever. I think it something's like quiet clause or something in the lease.
Jake Braun:
Quiet enjoyment.
Peter Fischbach:
Yes, it has nothing to do with noise. Really, each landlord in my area, I know how they work, and how they operate, and I know how they solve problems. Yes, sometimes it falls outside of the lease document. Most times, because I'm in the market so strong, I can call the landlord and smooth things over. I have to do that occasionally.
Jake Braun:
What about things like free rent and tenant improvements? Those are concepts that I think we didn't understand the beginning? Like landlord will give us two months free rent if we sign the lease.
Peter Fischbach:
All right, that's a market condition. As the world turns, that changes. Nowadays, office space is getting scarce because we haven't had a new office building in a number of years, especially here in St. Petersburg. Tampa's just about the same. The market's tightening, so there'll be little less rent as the buildings fill up. It'll be a little bit more rent cost per square foot. The square foot changes also. It used to be a formula, a very strict formula. Now, landlords can just do whatever they want to do. We have a range between 12 and 22.5% added on to what a real square footage is. 10 by 10 office is a 100 square feet. It can be 120 square feet, it can be 112 square feet. Rentable square feet.
There's a market, and it changes dramatically. Today, we're at a medium-high. I think as the world changes a little bit, people using a little bit less square feet per person per employee, that's helping a little bit in the market. Instead of being astronomical, it's just high.
Mirela Setkic:
Yeah, that makes sense.
Jake Braun:
Yeah, that all makes sense.
Mirela Setkic:
It's a big decision. It's a big commitment, too. It's very scary. Especially when you go to some of the fancier buildings and they want a five year lease, or a seven year lease, or a 10 year lease. How do you sign a document like that if you are a business that's at a tipping point between going from having five employees to maybe within next five years having 20 employees, or 25 employees. It's very scary, because you don't know what the future is going to bring.
Peter Fischbach:
Lease term is always probably a major consideration. The landlord wants a medium-long term. He's probably somewhere between three and five years for a normal office space. He balks at 20, and when it gets to one and two, that gets to be really tough.
The tenant moving is a pain in the ass. It's just unbelievable. You can't even think about how many things change just changing your address, possibly just a suite away from where you are, but because of being in this business a long time, I know that there are ways, there are options that you can have in your lease that can make expanding, changing, shrinking, growing, much, much easier. Mostly, what it is is letting the landlord know, and the landlord can usually accommodate either way.
Mirela Setkic:
Just keeping the dialogue open, and saying this is what's going on. We're growing or we're actually downsizing. Or we're changing to maybe having some people work remotely, and things like that.
Peter Fischbach:
It needs to be in the lease.
Mirela Setkic:
It needs to be in the lease in case you can't just have the conversation in the elevator. You're right. It has to be in the lease. If it's not in the lease, it's not real.
Jake Braun:
We've definitely had situations like that. Is there anything else in the local Tampa Bay area that's making it easy or difficult for businesses to find spaces now?
Peter Fischbach:
Well, it's just generally tight. Small is much harder to find than large.
Mirela Setkic:
Okay. What is small? What office space is considered small?
Peter Fischbach:
Well, a room. Really, probably our tightest market is in office suites, you just rent a room. They're all full for a variety of reasons. One of the reasons is corporate, maybe territory people. The corporate people like to give their salespeople an office, a base so they can contact them, too, I think. So a lot of it's corporate, but a lot of it is growing ... businesses are changing just dramatically. It's amazing how many new starts there are. Some of them don't get past start. The office suites are a good place to get going.
Jake Braun:
Yeah, I think we looked at them before we ended up in the office that we're in right now. They're pretty pricey for the square footage you get.
Peter Fischbach:
Yes.
Mirela Setkic:
They're nice, but they're expensive. Some of them are tiny, too. Some of them are just pretty much a little desk, and a chair, and no window. You're just in there, I guess, working at your laptop. Not everyone wants a big office. I guess they serve their purpose.
Peter Fischbach:
Well, there's a new trend at work; these huge spaces that accommodate lots of different kinds of tenants. I'm not sure I'm totally understanding the way that works. Really, the recent trends, in especially the large cities, is full floor spaces, very, very accommodating to couches and places to relax and places to work jointly. There are really no private offices, and maybe a little niche someplace where you can get away if you have a private conversation. Really, it's meant to have everybody interact. They'll be accessory uses. They'll be places, vending machines, and usually on a healthy trend. Conference areas where everybody shares. I'm thinking it's maybe more than a trend, because it's been a couple years now, and it's growing just fiercely. People need to consider that, also. I'm still a private office guy, but I think I understand the other concept, too.
Mirela Setkic:
I think that there are a couple of, or a few, coworking or sharing work spaces here in St. Pete. People can go in ... If they're just starting out and they're starting a business. They can go in and rent an office by the hour if they want to take a meeting. Those offices are actually very beautiful. They usually have a coffee shop where you can get together and meet with people.
That reminded me of the article that Peter sent that's what we were talking about this podcast. Where did you find this article, Peter? Medium? It was about the creative and fancy office, those spaces that people are creating for their employees. Having a nice office space is not only good for the owners of the business, but it's also good for attracting talent and getting talent to stay with you.
I was actually shocked, in the article it said that 83% of the workforce still primarily works at the office. Which I thought well this, I don't know. This sounds like it's really too high given that a few years ago everyone started working from home.
Peter Fischbach:
And Starbucks.
Mirela Setkic:
And Starbucks, and Panera. I did a little bit of working from home, and I hated it. Maybe people tried working from home. Now they're swinging the other way, and they're actually shifting to having some type of an office space that they go to. I'm not sure, but this is a very, very high percentage.
Jake Braun:
The number of people I see working at Starbucks or Panera now is pretty high. Is there anything else you think we should ask Peter, Mirela?
Mirela Setkic:
I don't know. I'm trying to think. I'm not very good at questions. Maybe we missed some questions that we should ask you, Peter? Do you have anything that you can add?
Jake Braun:
Is there anything we should have asked you, but we didn't?
Mirela Setkic:
How can we be better at doing this, Peter?
Peter Fischbach:
Well, let me turn it in another direction. What don't I like to do?
Mirela Setkic:
Okay, all right. What don't you like to do?
Peter Fischbach:
Restaurants. Oh my god. They are the hardest thing that anyone, probably including the restaurant people. Real estate wise, they're just brutal. I spent a year doing that exclusively, and so I learned my lesson.
Retail in general is really, really tough. The retail business comes from their location, not from their business. You're either getting business from the internet, or you're getting business from your location. Small shops now are ruling the roost, and very, very difficult in an amazingly high rent situation. I help every once in a while, because somebody approaches me with a right attitude, but they're very, very, very difficult because the location ... I mean, just on one side of the block or the other makes all the difference to a dress shop or a jewelry store or a eyeglass place. It's just incredible. There's a certain side of the street. There's a certain radius from their customer. Their customer won't go any further than a certain distance from their home. If you want to appeal to a rich client, you've got to be near Bayshore. If you have the medium, you want to be in the suburbs. You have to be in a visible location. I try not to do that, too.
Warehousing, that's really the easiest one.
Mirela Setkic:
Okay. You prefer not to work with restaurants and retail shops?
Peter Fischbach:
Yes.
Mirela Setkic:
Like boutiques, because they're more challenging, or more demanding. Or they're more particular with what they need.
Jake Braun:
Well, you pretty much need to be on what, either Bayshore and Beach -
Mirela Setkic:
Or Central Avenue.
Jake Braun:
... Or Central. If you're not there, then you're pretty much not a good downtown retail location?
Peter Fischbach:
Yeah. The location choices are so tiny that it's just very, very difficult. Then when you find it, brutally expensive for good locations.
Let's talk about rent for a second, because rent's always fun. In retail especially, they go, "Oh my god, how can that landlord charge $60 a square foot." Well, the landlord knows what his space can make for a retailer. It's pretty much same with a office. They know their value, because most professional landlords they are professionals. They know if they can get $20 a square foot, but they can't get $25, or versa.
When my clients are shopping for office space, or whatever kind of space, and they're astounded by a rent, I normally have to explain that the rent is, that's the value of the property. There's really not big swings in the rent. There's big swings in everything else. The rent is pretty much there. The rest of it, all those lease terms we talk about, that's a negotiable part, and that's where I concentrate. Really, what you want to do is make a win-win. The office, retail, whatever, they have to be happy and be able to work in their space, and the landlord needs to make a couple of bucks so that they can keep the lights on. That's really where I tune my efforts most of the time, that win-win.
Mirela Setkic:
Okay. Now, I remember years ago, five years ago, seven years ago, when we were looking for office space. Rent rates were kind of negotiable, significantly negotiable, because the economy was every different. Then when we were looking this time around, in 2017, it was very different. Is it tied how well the economy is doing? If the economy is down, is it easier to negotiate a good rate for your office? Tell us a little bit ... I want people to know if the rate is negotiable at all? Or if they just have to pay the asking price?
Jake Braun:
Is there just a general, oh we're just the retail rate is always 10% more than what we'll actually take? Or does that 10% of whatever that percentage is change as the market gets weaker or stronger?
Peter Fischbach:
All right, good question. The rate as you approach a property is really two things: the market, how much similar product is available, but secondly, and as important, the quality of the tenant. When I show up as a tenant rep, I add to that equation a little bit, but it's really up to the tenant to be able to prove to the landlord that they are qualified to rent that space. A landlord feels comfortable with that tenant, you get a much better rate. You get a much better deal. It's sometimes a little difficult, especially for a new business, to do that. They need to spend a couple of minutes to come up with a little financial statement, or some way to prove their worth. If you're a brand new business, then the landlord is already scared.
Mirela Setkic:
How do I prove that I'm legit, that I have some type of street cred that the landlord can rent to me? If I'm just starting out, then I don't have a financial statement?
Peter Fischbach:
It's really up to us both. I, myself, don't try to get unqualified people. When I see somebody, I can usually tell pretty quickly whether they're real or not real, and the landlords, too. It's a negotiable item, and it impacts directly rent.
Jake Braun:
Don't some landlords require certain things to make sure that that's maybe more the case, whether it's financial statements, additional insurance, business interruption insurance? I think we've had to go through some of those things in the past.
Peter Fischbach:
Yes. The quality of the building, the higher the quality, the higher the quality of tenants they want. Yeah, it's disastrous to lose a tenant. In all my years, I've never had anyone get chased for old rent, because when a tenant has to leave in the middle of the night, they have to leave in the middle of the night. The landlord figures out, well let's get it rented quickly. It's a responsibility that the tenant needs to adhere to.
Mirela Setkic:
What do you think is the part of the lease that is the most negotiable and the most worthy of negotiating for a tenant?
Peter Fischbach:
Ah. Well, we talked about tenant improvements. That's probably the most important. Somebody else occupied the space in a certain configuration before you got there. The landlord, most times, offers a tenant improvement allowance, whole different way. From a build-to-suit, in other words, I'll get you with a space planner. We'll do it in plan. Sometimes you have to pay a little bit, but most times you get it free, because the landlord likes to make those kind of improvements. It's a good situation for him financially to spend the money and improve his real estate.
Really, most of the time you need a change or two. Wall needs to move, a door needs to disappear. Most times the landlord approached correctly will be able to do that. Most times, no cost to the tenant. Sometimes, if it's extraordinary, and the landlord knows it can never be used again, yeah, they'll probably be a little bit of a cost. Really, even in this hot market, I think 100% of my clients lately they've gotten build-to-suits by the landlord. Then they may raise the rate a little bit, a couple of bucks, but really generally, I'm not having to bring cash out of pocket. It's good for tenants.
Mirela Setkic:
That is definitely good for tenant, especially if you're ...
Jake Braun:
Yeah, I like to hear that.
Mirela Setkic:
... Especially if you're starting out, and you don't have a big bag of cash. It's definitely a huge plus.
Jake Braun:
All right. Well, is there anything else that anyone wants to get in? Is there anything we missed before we wrap up here?
Mirela Setkic:
I think parking, especially here in St. Pete, parking is very, very scarce. How do companies make sure that they have enough parking spots for their employees? Can you talk about just the parking situation here in St. Pete?
Peter Fischbach:
Parking is always a serious consideration. In residential, it's wallpaper. In office and warehouse, it's parking. You have to accommodate your employee parking. Just flat got to do it. Now, maybe someday we're going to have all these self-driving cars and we won't need to consider all this, but probably for the next 20 years easily. It's always the last gasp to do a little office lease is how much parking can we get. We just need two more spaces and you have a deal. I try to sit with my clients and we plan a little bit how we're going to take care of it. You guys had that same problem here. Parking is just always tight. It's a serious consideration. We just need to do the best we can. The little bit bigger you are, the better negotiating power you have.
Most tenants, they do it by themselves. They don't even think about it. When the landlord says, oh, and you only get one and a half parking spaces, and they don't have that half car.
Jake Braun:
I think or the company just puts the onus on the employees then. They just say we've got our spots, but you guys will have to do whatever it takes.
Peter Fischbach:
Yeah, that's tough. That's tough.
Jake Braun:
It's a tough situation.
Mirela Setkic:
It is.
Jake Braun:
All right. Well, if any of the listeners out there are looking for office space in the Tampa Bay area, how can they get in contact with you? Or should they get in contact with you? I know you're a busy guy, and maybe sometimes you have a waiting list for people who want to find office space with you.
Peter Fischbach:
No, sometimes I just have the perfect list. Yes, please find me any way. The best way is telephone: (727) 432-9669. I have a strange email address: thetenantrep@gmail.com. Just put it like it sounds.
Jake Braun:
Again, with that tenant representation, I don't think anyone knows what that means.
Peter Fischbach:
No, but once they start getting emails, they ask me the question, and it's a good question to ask.
Jake Braun:
All right, so you're educating the public then.
Peter Fischbach:
Yeah. Then website is Fischbach Commercial, Fischbach has a little different spelling. F-I-S-C-H-B-A-C-H. You should be able to find me.
Jake Braun:
All right, that sounds great, Peter. Hopefully some people get in contact with you. This has been a great fourth episode, I think. We'd like to again thank Peter Fischbach from Fischbach Commercial for joining us today. Feel free to reach out to us if you have any questions or comments about anything we talked about today, or marketing in general. You can visit us on our website, KickinItWithKapok.com, or on social media. We're on Facebook, Instagram and Twitter as Kapok Marketing.
This has been a great Kickin' it with Kapok, brought to you by Kapok Marketing. Thanks for listening. We'll have something just as great for you next time.