Catapult Corporate Sponsor Jones Lang LaSalle (JLL) hosted an incredible event this summer at SingleHop’s rooftop deck. SingleHop graciously shared phenomenal views of the Chicago skyline with an impressive group of local technology and startup companies, including many Catapult Residents. The event focused on SingleHop’s history as a company and how its real estate was impacted by that growth. JLL demonstrated how it helped SingleHop address its real estate needs in the right way so the company could end up in its cool and unique River North space, reflecting its company culture. What better way to learn about this, than while enjoying delicious food (PIG ROAST!), good beer, music, and a beautiful sunset (check out pictures here).
SingleHop was founded by Zak Boca and Dan Ushman in 2006 with 6 employees in an office at 223 W Jackson. By 2009, SingleHop had tripled in size and moved to 621 W Randolph. After the surge in hiring, the company was booming. In 2012, Zak and Dan were ready for a new, bigger office.
SingleHop’s Real Estate Challenges:
- Completely out of space at 621 W Randolph.
- Building was deteriorating structurally.
- Lease flexibility was key - outside capital infusion required the team to re-calculate their space needs and only look for short-term space.
- High demand for creative loft space but lack of inventory.
- Not willing to compromise company culture - looking for office space as an investment in its human capital and near public transportation/amenities.
JLL Helps Solve Challenges:
- Helped with site selection and financial analysis. JLL targeted a building (215 West Ohio) that would be coming on the market soon but the space wasn’t available yet.
- Worked through business terms and lease negotiations to maximize cash preservation (monthly rent, tenant improvement dollars and free rent).
- Negotiated extra flexibility in the lease agreement.
- Minimized upfront out-of-pocket exposure through focused negotiations on limiting the security deposit. The recent cash infusion was important to be invested in the company and not the landlord’s escrow account!
- Facilitated interviews and competitive bidding for architects, general contractors, new and used furniture vendors, voice and data cabling, movers and more.
In April 2012, SingleHop moved to 215 West Ohio and signed a 25 month lease for 14,000 square feet right near other rising stars in the technology and start up community like Trunk Club, Industrious, Catapult Chicago, 1871 and Red Frog Events.
Today, SingleHop has 103 employees and loves the office space! The JLL/SingleHop partnership didn’t end when the lease was signed. JLL continues to work with Zak and Dan to help them grow and look for real estate opportunities that align with their business – including discussions on expanded office space, economic incentives (EDGE Tax Credits, ETIP Training Credits, etc.) and more.
What Every Growing Startup Should Know:
- Know the landlords!
- Willingness to negotiate - target landlords that do not require large amount of security deposit. You don’t want your capital going to securing your lease, you want it invested in your business.
- Flexibility – target landlords that are willing to provide flexible lease terms so you are NOT locked in for a long-term lease. Longer term leases are for companies that can predict and anticipate their future 5-10 years down the road.
- Financial Health of Landlord – You don’t want to be invested in negotiating with the building and then be “blind-sided” by a foreclosure suit that kills or delays your deal. When JLL engaged 215 West Ohio on behalf of SingleHop we were very aware that the building was in foreclosure and had a plan in place to work through that “bump in the road” through the negotiations.
- Do you need to be in River North? River North is the tightest real estate market in downtown Chicago and rents are on the rise.
- Could you operate in the Fulton market district where the market is not as mature and the Morgan Green Line stop was just installed?
- The real estate process can take much longer than people think - anywhere from 45-150 days (touring space options, negotiating business terms, negotiating lease, construction, moving) before you can occupy and operate your business.
Want to hear more about Jones Lang LaSalle’s experience working with SingleHop and other tech/startup companies? Want to know other things to look out for as a start-up investigating the real estate market? Talk to Phil Geiger at JLL! @philcgeiger, LinkedIn
JLL Website: http://www.jll.com/chicago