When leasing spec office suites means 'win-win'.

Over the past twelve months, the cost of construction has increased by approximately 30% while vacancy rates for office space in certain sectors of the San Fernando Valley have dropped to a historical low of 10%. For a tenant looking to relocate their office, this combination of factors makes it very difficult to move because there is very little quality built-out space available and landlords are offering less tenant improvement allowances as the market tightens.

The answer for tenants is "spec" suites, Spec suites are brand new office spaces that are completely finished, or built-out, before identifying a tenant who will ultimately lease the unit. This is the new leasing strategy underway at 16027 Ventura Boulevard in Encino. The new building owners just completed over 13,000 square feet of spec suites in various sizes, Efficiently laid out and aesthetically designed to accommodate a typical professional office tenant, each suite is ready to occupy.

To assist tenants in the leasing process, the owners have retained Scott Romick and Jeremy Barbakow of Lee & Associates as the exclusive brokers for the building. Specializing in the San Fernando Valley office market, Romick and Barbakow have over 20 years of combined experience representing landlords and tenants in negotiating lease transactions. They suggest that the spec suite concept works especially well for tenants interested in leasing quality space ranging from 1,500 to 3,400 square feet who want to minimize distractions from their company's primary business during the relocation process. Leasing spec suites effectively eliminate the often time-consuming negotiation and expense of tenant improvements. Results are already being seen.

"For instance," says Romick, "a prospective tenant viewed a suite on a Tuesday before it was even completed, signed the lease on Friday and the suite was ready for move-in the following Monday."

According to Barbakow, "Building spec suites are a 'win-win' for both landlord and tenant." When the property changed hands late last year, the new owners recognized there was a large vacancy and existing conditions required major modifications in order to get the spaces leased. By building several suites simultaneously, savings in design fees and construction expenses effectively reduce overall costs. Additionally, for the common three-to-five year office leases, space can be more economically refurbished and leased again simply with a little paint and perhaps carpet replacement. In the end, the ability to maintain desirable suite sizes in a pleasing layout means fewer building vacancies and more income.

This approach, which expedites the lease negotiation process, eliminates construction time, and results in earlier tenant occupancy dates, is a positive as the landlord receives rent sooner. For this Encino building, a tenant gets high quality offices and an effortless leasing process compared to many other buildings in the area

The Woodland Hills-based architectural firm, Pace Design Group, a division of Pace Compumetrics, Inc., was hired to create and design the spec suites.

Pace Compumetrics CEO, Terry Resnick notes, "Our experience dates back to the late Seventies. There have always been markets in which the concept of spec suites is a 'win-win'. The challenge is to create spaces that are consistent with the needs of the tenants in each market and the economic parameters set by the building owner."

Starting with over 15,000 square feet of contiguous space to configure, Pace developed layouts enabling suites up to 8,000 square feet. "We designed each suite to maximize the use of the available space, Wherever possible, suites can be divided into spaces as small as 1,000 square feet," commented Resnick. With an eye to tenant needs, "The window line office and the ceiling grid system were designed to allow expansion or contraction without substantial modification," adds Principal-in-charge, Nancy Cohn.

Properly planned and executed, spec suites are without doubt a winning proposition for tenant and landlord alike.

Scott Romick and Jeremy Barbakow are principals at Lee & Associates--LA North/Ventura, Inc., a member of the Lee & Associates Group of Companies with offices in Sherman Oaks and Calabasas fulfilling client needs for industrial, office, retail and investment/multifamily property across the North Los Angeles and Ventura County region. Lee & Associates, found in 1979, is one of the largest regional commercial real estate providers in the United States.