CHICAGO-In March, Jones Lang LaSalle, headquartered in Chicago, partnered with Startup America Partnership, an organization geared toward helping America’s start-up businesses, by offering information and advice about commercial real estate to business owners in the pre-launch and just-launching stage. Since that time, JLL has followed Startup America to various parts of the country, and today, will kick off the initiative in the Dallas-Fort Worth area with a special presentation at Cowboys Stadium in Arlington, TX.
According to JLL’s senior vice president Andrew O’Brien, Startup America, the Obama administration’s initiative to help high-growth companies get a leg up, had a number of industries already on board, such as legal, technology and accounting. But what it didn’t have was a real estate component. “Real estate is a huge part about how these companies succeed and can grow,” he explains.
Since March, O’Brien and JLL colleague, vice president Alex Lassar, have been traveling to launch events on behalf of Startup America, to offer advice and suggestions to start-ups on the best type of commercial real estate opportunities that won’t break the budget. The duo, which works from the company’s Washington, DC office, tells GlobeSt.com that space needs for start-ups differ vastly from more established companies in one way. “Flexibility,” O’Brien notes. “Start-up companies, especially the ones Startup American works with, are dynamic, with high growth potential and they need flexibility. They don’t like signing five-year leases. These companies outgrow that space in 12-to-14 months – or sometimes even six months.”
The start-ups also rely on different infrastructure from companies that have been around for awhile. “These are tenants that are used to taking up their laptops and cell phones and working just about anywhere,” O’Brien observes. Not that working remotely is indicative of start-up status. “During the past three-to-five years, we’ve gone completely mobile and paperless,” Lassar points out. “When it comes to work space, it’s more about the people than anything else. They can set up pretty much anywhere they need to.”
The other issue impacting small businesses when it comes to commercial real estate is tenant credit. A start-up tenant isn’t going to have a whole lot of a credit history, for one thing. Furthermore, “you’re in a different position as a one-year-old company hoping to scale up, with 10% growth a month, rather than the tenant that’s been occupying downtown real estate for the past 100 years,” Lassar observes. “The industry hasn’t really seen this type of trend before.”
As such, part of Lassar’s and O’Brien’s jobs are to also try to educate building owners about the need for flexibility when it comes to leasing to such tenants. Lassar acknowledges that much of the industry has been somewhat reticent when it comes to considering different business models from the typical one involving a set amount of space as part of a five-year lease.
The good news is that landlords in certain parts of the country are starting to sit up and take notice about the changing needs, especially when it comes to start-up businesses. “We’re doing what we can to change the situation,” O’Brien says. “It’s related to what we’re working on for Startup America.”