Real Estate keys for the entertainment industry.Although many industries continue to falter amidst a·midst prep. Variant of amid. [Middle English amiddes : amidde; see amid + -es, adverbial suffix; see -s3.] California's unpredictable economic future, the entertainment industry seems to have rebounded more rapidly than others. Mandates to consistently improve control of operations and reduce costs amidst a highly volatile business environment are resulting in greater pressure being placed on enhancing the performance of a company's real estate assets. As a result, specific aspects of office leasing should be addressed as critical issues to ensure the success of a media related business. The 'Industry's' Distinctive Real Estate and Planning Needs Businesses in the entertainment industry have unique facility requirements that call for specific methodologies to address them. Following are some proven tactics to help develop a successful strategy: Embrace a Collaborative Culture It is important to evaluate every aspect of a business operation when considering a real estate strategy. In order to avoid unnecessary pitfalls, best results are achieved by involving a team of experts in strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. , financial structuring and transaction management. In addition, specialists in real estate law, information technology and human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. should be included. After the 'core delivery team' is assembled, they will direct professional space planners, architects, contractors, and construction management experts which should be integrated early in the process to deliver superior results in a fully collaborative environment. Image//Location//Lifestyle By fully leveraging this comprehensive team of experts, a company has the best chance for the successful development of a customized real estate plan. The plan should be attentive at·ten·tive adj. 1. Giving care or attention; watchful: attentive to detail. 2. Marked by or offering devoted and assiduous attention to the pleasure or comfort of others. to the image, environment, working hours and culture of the business. Key to a successful real estate plan is not just cost considerations, but developing a facility that is conducive con·du·cive adj. Tending to cause or bring about; contributive: working conditions not conducive to productivity. See Synonyms at favorable. to the attraction and retention of the highest caliber employees, talent and clients. Be Sure Planning is Truly Strategic Professionals in the entertainment industry often work long and unusual hours. Therefore, when drawing up a strategic plan for one's work space, it is important to consider more than just a location's drive time from the senior executives' homes. There are a variety of factors that impact each business uniquely, including: access to labor pool and housing; drive time to/from major suppliers; client and competitor locations, and numerous other economic and quality of life issues. Sophisticated demographic and mapping analysis can be used as an effective tool to find the best locational solution and to develop the critical consensus within the organization. Be Creative With Financial Structures The real estate world offers a wide variety of financial vehicles to facilitate the acquisition of office and production space. When evaluating the most appropriate transaction structure, consideration should be given to: * Accounting treatments * Tax considerations * Up-front concessions vs. increased rent obligations * Practical and cost-effective exit strategies The financial analysis prepared by a sophisticated advisor should include both GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and tax considerations. An office lease is a major financial obligation and should be fully analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. on a net present cost basis using a discount rate appropriate to the company's credit standing. Negotiate for Flexibility In an industry that is fast-paced and malleable malleable /mal·le·a·ble/ (mal´e-ah-b'l) susceptible of being beaten out into a thin plate. mal·le·a·ble adj. 1. Capable of being shaped or formed, as by hammering or pressure. , it is important to negotiate a lease that is, in essence, a "Living Document"--one that provides the greatest flexibility for expansion or contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction or even cancellation. There are dozens of critical provisions in a lease document that are often overlooked. When properly and professionally negotiated, the lease will serve to enhance the business model, rather than constrain con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. it. Case Study # 1 A newly launched, highly visible company comprised of film and television production, executive management and a new media group wanted to create a dynamic environment whereby producers, directors, talent, marketing and internet pioneers could come together under one roof to launch projects on a multi-tier basis. The new venture required a combination of high-end office space for its executive management and creative space for its internet group. Studley's Media Services Group secured a free standing, 60,000 square foot building for the company with prominent identity negotiated as part of the transaction. A successful example of the value of assembling a team of experts at the onset of the project, the company now occupies an award winning, renowned project in Santa Monica--a valuable asset in attracting and retaining top talent. Case Study #2 A television giant had three years remaining on the lease for their 100,000 square foot headquarters in Miracle Mile Miracle Mile can refer to the following places:
After fully vetting vet 1 Informal n. A veterinarian. v. vet·ted, vet·ting, vets v.tr. 1. To subject to veterinary evaluation, examination, medication, or surgery. 2. the alternatives with the client, Studley negotiated with the new landlord to convert the remaining short-term lease obligation into a new long-term lease. Through an in-depth analysis of the client's current and projected facility needs, the tenant was able to take advantage of reconfiguring the space, enhancing efficiency and allowing the reduction of the total square footage required to accommodate the company's future needs. The resulting transaction provided a significant tenant improvement contribution from the landlord that enabled the company to reconfigure To change the status of something. the premises with no capital outlay capital outlay See capital expenditure. and reduce their total square footage. The new lease terms, coupled with the reduced square footage, resulted in a 20% reduction in their occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal over the remaining lease term. Case Study #3 Studley's Media Services Group advised another media giant in Burbank to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the then-current market economics which were at a historical low. The client was also interested in securing growth space (immediately and at appropriate intervals over the new term) and a cash allowance in order to remodel re·mod·el tr.v. re·mod·eled also re·mod·elled, re·mod·el·ing also re·mod·el·ling, re·mod·els also re·mod·els To make over in structure or style; reconstruct. their existing space and construct their new space. The alternative was to expand at a different location or to move out of the building and structure a new transaction which would assume their existing lease obligation. Several outside alternatives were seriously considered. Because it was not necessary for the expansion space to be at the same location as their current space, Studley was able to leverage the outside alternatives in order to convince the current landlord into dramatically reducing the rental cost on their existing space. The new 130,000 foot lease includes significant front end savings, contraction and expansion flexibility, and features an effective rental rate that remains 25% below their prior rent for the entire new 10year term of the lease. Having seen these examples of success, it is no wonder that more and more successful businesses, particularly those in the media and entertainment industry, are benefiting from professional tenant representation in order to develop a comprehensive strategic real estate plan and to fully analyze and negotiate specific issues of all transactions. Paul Stockwell and Mark Robinson Mark Robinson may refer to:
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