CITY vs. SUBURB,
WHERE TO LOCATE YOUR LAW OFFICE?
- Part II -
By Levi F. Smith, Esq.
As Published in Michigan Lawyers Weekly
November 11, 2002
Location, location, location! It applies to a law firm as much as a retail store or a restaurant
when considering where to establish a business. But what is the right location
- downtown or in the suburbs, and in which building?
A large firm can "cut the baby in half” by having a branch office in one or the other. But where should the headquarters be? What if a firm only has one office?
A site location study will provide pertinent information that is helpful to avoid a "seat of the pants" subjective solution which is often outcome determinative based on the closest option to the decision maker's home or club! This article considers some of the major factors in a site location study to be weighted; factors are not listed necessarily in order of importance.
Clients - Some clients do not care where you are located or how prestigious the building is. You are the specialist that they want. Others may be sensitive to the hassle factor of travel time, ease and cost of parking. Then there are your rates. If you are more affordable because of your class C building in a class C location, the hassle factor is less important. Ease of giving directions to new clients may be more important for some practices i.e. immigration, criminal, workers compensation, social security and legal aid. Other clients will judge you based on image; high rent equals success.
Political Consideration - Many firms need to be near clients for the benefit/perception of the clients. Governments may give business only to locally located firms. Clients may demand that you be in a building that they own. Large company owners may want to be able to walk a block or a few flights of stairs to see you. If this is the case, a small branch office might satisfy the requirement. Although geography may be less necessary in the age of technology, sometimes you must do whatever it takes to keep the client happy or to get new clients.
Employee Availability - In recent years, there has been a tight labor supply for quality support staff. Will you be able to recruit the staff you want at a salary you can afford to work in location A? Is the rush hour traffic or perceived area crime after dark such that you will not be able to staff up to your needs?
Parking - In law school we heard the phase, "the tail wagging the dog". Parking in many cases is the dog's tail! Paid parking is common in downtowns and it may be a long walk to and from the office. When selecting a building, decision makers have been known to rank convenient or reserved parking over image, rental rate, and other factors. Where will clients and staff park? What will the cost be? Will this affect hiring and retention of attorneys and staff for the firm? It is risky and short sighted to think only about where the decision makers will park when only a limited number of on site spaces are offered as part of the lease. Handicapped parking and access is also important. Where and how many spaces are located nearby?
Some firms will pay for staff parking. Cost of firm subsidized parking downtown should be added to rent for true occupancy costs. Downtown monthly parking permits, when available, are $20 in Bay City, $105 in Ann Arbor, and over $200 in Detroit. Do the math: $1200 per year per employee at 200 square feet of office space per employee equals an additional $6 per square foot to the lease costs if the employer is paying.
Security - In many cities, security may be an issue. Will your staff have to walk past the intersection of "scary and dangerous" to get to their car or to catch the bus? Is there 24/7 security in the building? Is the parking lot well lighted and secure? Will this make it harder to hire and retain staff? Will people be willing to work after dark?
Quality of Life - Firms should weigh all factors involving quality of life to determine the best location. These factors are not able to be quantitatively determined.
Downtowns are known for the option of walking to different restaurants for lunch and going out for refreshments after work with a client or staff member. Is this preferred to the necessity of getting in the car to go anywhere in the suburbs? Only the management committee can weigh this.
Historically, downtown was a city center with small merchants, government offices, office buildings, paid parking and sidewalks. Suburbs sprawl with shopping malls, office buildings, free parking and shorter commutes. For the most part, everyone is reliant on the automobile.
Networking - Lawyers meet prospective clients by attorney referrals, client word of mouth, lecturing, public relations and advertising (watch afternoon TV). Lawyers also meet clients through community involvement and joining health and golf clubs.
City Income Tax - Some cities (Detroit and Pontiac) have instituted a city income tax that applies to resident and non-resident workers. Rates for residents vary from 1% to 3%; non-residents may pay half as much. If the firm is picking up this cost by paying higher wages because the tax does not exist in most suburbs, this amount should be added to the rent for the true cost of occupancy.
Office Market Rates - Typically, rates and available space will vary greatly between downtown and the suburbs. Markets have been so tight that 10,000 square feet of class A (high rent, image, amenities) space has not been available in recent years in some areas. When you need occupancy, start the search early; this will make your decision easier and negotiations more in your favor. With your lease in hand, a developer might start a new building that caters to your firm's specific needs.
Rates will vary based on location, building age, amenities, proximity of parking and market conditions.
Own or Lease? - This can be the topic of an entire article. Considerations include cost of purchase and improvements, ability to expand, time to manage the building, risk of leasing vacant space, availability of property, opportunity, cost of money used for the down payment and improvements, etc.
Continued in Part II
BIO: Levi F. Smith, a native Michigander, lives in West Bloomfield.
After passing the bar in Michigan and California and practicing law for 6
years, he entered the commercial real estate field. In 1988 he founded the first corporate real estate firm,
Levi F. Smith Real Estate, Inc. in Michigan to exclusively represent tenants and buyers. For
more information, visit
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